Hear me out, I've spent years thinking about this :)
Yes, past underinvestment is bad. And yes, initially they are a band-aid, until yes they do become critical.
My excitement for self-driving tech isn't about the short term changes, but just how powerful a technology this is in the longer term. Ultimately this tech is not about cars, it's about the ability to automate the movement of mass. This is novel and meaningful.
An obvious medium-term implication of self-driving is that cities will ban human drivers, because that way cities can ditch a bunch of high-cost infrastructure required because of human fallibility. Up until that point, self-driving would be a band-aid. After that point, the dominoes start to fall.
1. Form factors change: cars become 1-4 person pods, stripped of the unnecessary bulk of excessive safety systems and unused capacity.
2. Ownership changes: municipalities will buy fleets of cheap mass-produced pods to replace extremely capex intensive public transport.
3. What is transported changes: now you have shipping drones dropping off standardized (reusable) packages into standardized intakes. Think The Box [1] but smaller.
4. Infrastructure changes: Roads narrow, parking becomes drop-off spots, larger cafes, actual parks. Cut and cover roads multiply, leaving more space above ground for people. Cities grow 20% without getting bigger, just by obviating the need for half their roads. The blight of various parking signs and warnings to drivers disappear. People can walk about freely or ride their bikes. It's quieter. The air quality improves.
5. Housing changes: Garages transform into rooms. People ditch bulky refrigerators in favor of ordering drone-delivered fresh produce in minutes. Drones deliver upstairs not just at street level. Pods become elevators. We've seen all this in science fiction... guess what the enabling technology is?
If you extend the implications of the automated movement of mass, the logical conclusion is the physical infrastructure of the city will transform to take advantage of every gain that creates. Cities dedicate 25-40%+ of their land mass to roads. In dense urban cores, 20% of their land mass is just parking spots. We can't route people-driven cars underground unless we really really mean it and build a highway. We waste a huge amount of space on transportation. We also shape all of our buildings around the constraints imposed by car-shaped objects and all their various externalities, including noise and air pollution.
My belief is that self-driving is easily the most transformative tech to hit cities since the car, and may exceed the impact that cars have had on the built world.
[1] https://en.wikipedia.org/wiki/The_Box_(Levinson_book)