The driver of a taxi needs to make enough in a day to cover the periods when there are no fares, or travel from a low fare-density area back to the high fare-density areas (and in some regions with ridiculously constrained supply of taxis via "badges" or other such anti-competitive pro-monopoly legislation, to pay the ridiculous fee to just operate a cab).
With the drivers removed, you now have a fleet of taxis that can run 24 hours a day (minus maintenance etc.), cost zero to just sit and wait for a fare, and can be managed and coordinated easily to migrate across the changing fare-density regions throughout the day.
If the price and convenience goes down enough, various groups of people stop needing cars. They just use the "get me a cab" app on their smartphone (or just use the regular telephone) to get a cab when they need it. If this creates a positive feedback loop of cheaper & more convenient -> more people using it -> more taxis deploted -> cheaper & more convenient etc., then in some high-population areas, owning a car will become an unnecessary extravagance.
Operated automatically gives scope for further savings; heading from point A to point C via B, and someone in B is also going to C? You'll get offered a "share this ride for this discount" option.
All this leads, hopefully, to fewer cars needed to provide the same number of journeys, at lower cost. So, how do I go about shorting the car manufacturers? :p