The bus is only "underutilized much of the day" in low density areas where automated on-demand cars would make sense. In cities like San Francisco or New York,

The bus is only "underutilized much of the day" in low density areas where automated on-demand cars would make sense. In cities like San Francisco or New York, or even Los Angeles, buses are relatively full even in the middle of the day. Buses take as much space as 3 cars. Even if you can manage to optimize everything perfectly to pack 4 people in these cars at all time, you only move 12 people using the same amount of road of a bus transporting 60 to 90 people, much more in articulated vehicles. There is just not enough room in dense cities. You have to consider the overall efficiency of a bus network, not one particular trip. In urban centers where buses are run on frequency, not timetable, a transit line is attractive because it runs often. People take the bus in rush hours in part because they know they can depend on it all day. These seemingly low-efficiency trips where the bus is half empty are actually very important to the overall efficiency of the network, because they induce demand. The case for transit is a space argument, not a fuel argument. Mass transit is simply the most space efficient way of moving people around.