The Great Epizootic

Humans made poor draft animals. 

Although steampower in railways were the norm by the mid 1800s, steam was not really viable for street railways and various attempts to come up with alternate power, electricity (battery or 3rd rail and wire systems), compressed air, flywheels etc. was meeting with limited success. 
The horsedrawn system worked well enough, and were quite profitable. A horse worked 12 to 15 miles each day and was well taken care of for their 18 or so hours off. But in 1872 the horse population was hit by a flu-like epidemic which killed thousands of horses in the Northeast of the US. It appeared in Canada in October and within a few weeks had covered New England and soon the south, finally spreading across the country, at a rate that was faster than simple horse to horse transmission seemed possible. At one point in Philadelphia 175 to 200 horses were dying daily. After a few months, it calmed down, the disease was less virulent, new horses brought in from the country  seemed to be more resistant and things returned to normal. Stables were rearranged to stop the head to head stabling and new hygienic protocols were put in place. 
 Experiments in NYC with men or oxen replacing horses weren't successful but street railway owners and operators were quite a bit more open to alternatives to animal power, by the early 1880s the first viable trolley cars were starting to appear.