Capacity isn't the only issue of transportation. There are plenty of negative externalities besides this, like emissions, pollution, noise. Reducing VMT and con

Capacity isn't the only issue of transportation. There are plenty of negative externalities besides this, like emissions, pollution, noise. Reducing VMT and converting it to transit use would be beneficial at any time of day. On the other hand, off-peak capacity on transit is often near free. The line is built anyway, or the services have to be provided anyway, or the shifts are 8 hours anyway, so providing extra off-peak trips is often not a big strain. If the displaced trips are done by people who usually don't take transit, it means they'll pay more expensive fares (single tickets), which could even be cost-neutral wrt to subsidies. At the same time, those trips can get drivers used to the idea of taking transit, possibly encouraging them to take more transit in the future.