I have a hard time understanding this criticism. Why not do both?
It seems to me like underground highways make sense as an alternative to above ground highways in urban areas, not that they're an alternative to rail. There's lots of cities with excellent public transport that also make use of underground car travel (Melbourne for e.g.). If a company can figure out how to (safely) make underground highways more quickly and more affordably, it seems like that means we may need to do above-ground roads less frequently -- why would that not be a good thing?
Further, obviously Musk has a PR angle in facilitating tesla traffic here as the test bed in early days, but I don't see any reason that this couldn't be repurposed to rail use at scale.
Being able to make underground tunnels cheaper and faster is cool. Using them for cars is mostly a boondoggle with clearly superior alternatives.
I suspect in practice the actual approach is going to be a mix of all of the above. So my reasoning is primarily that if all cities won't give up cars anyway, it seems objectively better to make it easier to at least move more of them underground. I suppose one case where I would change my mind is if there was evidence that more affordable underground roads reduced the investment in public transit.
…what is it?