they're cheaper because they can subsidize their fares via VC money
That's not the (only) reason why they're cheaper.
They're cheaper because they offer drivers less downtime, therefore the drivers can end up earning more money since they're driving more of the time and earning fares.
They're also cheaper because services like uber pool and lyft line allow riders to spilt the fare among themselves.
I also think that Uber and Lyft will be cheaper than taxis for many more years to come. They're just more efficient as business models than taxis'.
Kalanick's moral compass may or may not be aligned, but the service his company offers is awesome.