The issue is usually capacity management. Pre-covid most places with decent transit had crowding issues during rush hour. In 2010 Guangzhou made fares on its subway free to ease congestion during the Asian Games, and the result was a more than doubling of ridership. Users reported queue times of more than 20 minutes to enter stations, and eight busy stations had to be turned exit only as an emergency measure. https://humantransit.org/2010/11/guangzhou-abandons-free-far...

A fair amount of places have tried free transit. Usually the result found is that most trips were diverted from walking and cycling.