Nothing about Uber makes hired car rides fundamentally cheaper than anything before it. Cars still cost the same amount of money to buy/rent and operate. That cost hasn't gone away, even in the iPhone era. If Uber is not paying those costs directly, then someone is. In the Uber model, it's just been transferred to the driver, for whom driving is as a result less profitable. So much for the car. The other component of a ride service is the driver himself. A driver's undivided time costs the same, whether he's driving for Uber or for an Uber clone or for a local taxi company. Human labor hasn't suddenly gotten cheaper just because you can hail them on your iPhone. And you don't even want the cheapest possible labor here, for the sake of your own safety.
Oh, but you say, if the drivers were to be entirely replaced with self-driving cars, then Uber's margins would be amazing right? Yes, they would be. But self-driving cars are not coming anytime soon. Just ask the people most invested in Uber: the investors. They want you to wait for self-driving cars to fix Uber's non-existent business model, while they themselves can't wait to cash out as soon as possible.
Even if it does happen many years from now, it doesn't put Uber in a good position. The self-driving car technology will be a commodity. There will be no barrier preventing anyone else from launching their own fleets. Uber's product also has no network effect and is not sticky. Its customers are not buying an experience, they are buying a utility (a ride from point A to point B at the lowest possible cost). As a result, customers have zero loyalty and are happy to switch to the lowest cost competitor.
Uber has hugely impressive numbers though right? Yes, tons of revenue and no profits. Because who would pass up a private car ride from San Francisco to Palo Alto for $45 when a taxi would cost $125? As long as VC's subsidize rides, customers will continue to buy them.