Elon Musk's strategy for taking on Uber and Lyft

Tesla made a splash when it said that all of its new cars will be equipped with self-driving hardware. But what Tesla did not mention in its announcement is how it plans to limit its customers with the technology. According to the company's fine print, people who want to use their self-driving-capable Teslas to earn a bit of money with ride-hailing services like Uber or Lyft will be disappointed. (AP Photo/Ringo H.W. Chiu, File)

Tesla made a splash when it said that all of its new cars will be equipped with self-driving hardware. Even though drivers won't be able to activate the fully autonomous mode for at least a year, this is another step toward a future where cars can get you from point A to point B without you taking the wheel.

But what Tesla did not mention in its announcement is how it plans to limit its customers with the technology. According to the company's fine print, people who want to use their self-driving-capable Teslas to earn a bit of money with ride-hailing services like Uber or Lyft will be disappointed.

"Using a self-driving Tesla for car sharing and ride hailing for friends and family is fine," the company writes, "but doing so for revenue purposes will only be permissible on the Tesla Network, details of which will be released next year."

This passage is significant for two reasons. First, it puts a name to what Tesla chief executive Elon Musk has previously described only as a general ride-hailing service. In his updated master plan for the company from earlier this year, Musk outlined a "Tesla shared fleet" that could pick up passengers at the touch of a button -- just like Uber. By contributing their vehicles to the fleet, he said, Tesla owners could earn money that they could apply toward paying off their cars, making a Model 3, Model S or Model X more affordable. Based on this week's announcement, it seems Tesla intends to call this program the Tesla Network.

Second, and more importantly, it also suggests that Musk intends to pull an Apple-like maneuver by locking Tesla owners into a closed company ecosystem. It highlights the degree of power that a company like Tesla, which controls both the hardware and the software of its cars, seeks over its customers. And the move seems to be aimed at helping Tesla survive as a new entrant in the increasingly competitive ride-hailing market.

Musk's strategy for taking on Uber and Lyft appears to go like this: (1) Saturate the market with a huge number of affordable, self-driving, electric cars, such as the Model 3. (2) Make it so that those cars are tied to Tesla's ride-hailing network. (3) Give owners a financial incentive to participate in the Tesla Network. (4) Start taking market share away from Uber and Lyft.

It's unclear whether this strategy will work, of course. The Model 3 still costs $35,000 before any tax incentives, a price that could hamper widespread adoption. And nobody knows how many Tesla drivers will be willing to turn their vehicles into ride-hailing cars. But this appears to be how Musk is approaching his more established rivals in the ride-hailing space.

Another question is whether Teslas driven in manual mode will still be free to work for other ride-hailing services, and the company did not immediately respond to a request for comment Thursday. But the rule, which was first reported by Ars Technica, represents a new constraint on how drivers can use the product they bought.