For the simple reason that they would get ridiculously trashed. Every time I received a Model S loaner, I felt so bad for that car. I take care of a loaner at least as well as my own car because it is someone else's property but it's like some people have absolutely no respect for someone else's property. Some of these Model S loaners look like they came from a war zone with virtually every body panel scratched/damaged, The interiors were trashed
This is what they used to do and this is what led to so many Tesla CPO/used customers getting cars that look like they came from a garbage dump. These "used cars" end up being someone's "baby" when they buy that car and we've read so many sad stories of people who expressed dismay after finding out they bought a car that had been trashed,
I think a better solution is to build a fleet of "basic" Model 3s at a far lower cost to be used as Service Loaners and they can then convert those vehicles for use in the Tesla ride share program when FSD is implemented.
Use of Model S vehicles as Service Loaners really trashes their value. IMHO it is better to put that wear and tear on a $35K Model 3 rather than a $50-70K+ used Model S.