Because the price differential will make ownership a luxury.

In fact, your comment alludes to that. For you, a self-driving car is an opportunity to make a leisurely, personalized, homey space. That's wonderful, if one has the money for it - and many people do.

However, let's take a step back and look at the millions of people who say, "I want a car that gets me from A to B". They're not looking to own a leisurely, personalized, homey space. They're looking to get places, hopefully at the cheapest price and in the most reliable way. They're not looking to own something.

You note that cars are often parked. Given the low utilization of vehicles, it stands to reason that renting time in a self-driving taxi should be significantly cheaper than owning one. If that self-driving taxi can serve the needs of 3 people instead of one, you only need to pay for a third of it. Even if the profit margins are an outrageous 50%, you'd be paying 150% of 33.3% or 50% of the cost of owning a self-driving car. However, the pricing is likely to be even more favorable. If owning a car costs you $500/mo and you can get your transit via self-driving taxi for $150/mo, there's a huge cost incentive to switch.

I think that's the big thing. The cost advantage is going to be quite stark. Owning a car will cost many times what getting driven around by a self-driving taxi will cost. While many people can afford a car today, it's certainly a significant budget item for many. Even for those that can comfortably afford it, it's safe to assume that many will ditch the cost for something cheaper.

Ultimately, our tastes as a society change as our society changes. As the cost of owning a car becomes sky-high compared to a mostly-substitute, many people will switch to it. Not everyone will. People spend up for luxury items all the time. But luxury items are, well, not commodities. Even if you can afford a luxury item, if you don't value that kind of item, you won't pay up for it. Plenty of rich people see a car as just a way to get from A to B. They'll take the cheaper self-driving taxi. Plenty of low and middle income people will be able to stretch their budgets better lowering transportation costs substantially.

Even if you're skeptical of a dramatic change, let's say I propose that 10% of people that currently own cars would ditch them for self-driving taxis. I'm not even suggesting that it's changing society, but a 10% dip in demand is quite significant to an industry.

I think you're right that there would be something nice about having a leisurely, homey ride. It could be a wonderful experience. But luxury automakers already try to give their owners a much nicer experience than someone gets in a Civic and there are definitely more Civic's out there. It's that, while a Mercedes S-Class is lovely, the Civic allows them to spend their money on other things (or afford transportation at all). Similarly, self-driving taxis will allow people to spend their money on other things or more easily afford transportation. You certainly paint a desirable picture and there are definitely people that will choose your vision. However, I think more people will choose the economy of self-driving taxis.

Cars made horses a luxury item. Horses were no longer common transportation. The car was cheaper and better. It certainly wasn't perfect in all ways, but enough that horses became a luxury item.