The technology would enable rapid reloading and reusability of the spacecraft, he said, noting that in the past rockets and space craft return to Earth in a fireball, rendering them unusable.
"This is extremely important for revolutionizing access to space because as long as we continue to throw away rockets and space crafts, we will never truly have access to space it'll always be incredibly expensive," Musk said.
The white capsule also featured a sleek interior with swing-up computer screens at the control station, a two-level seating system to accommodate up to seven astronauts and large windows for them to marvel at Earth's curvature.
Since the shuttle fleet retired in 2011, NASA has depended on Russian rockets to transport astronauts to orbit and back, paying nearly $71 million per seat. The space agency has said it wants U.S. companies to fill the void by 2017 and has doled out seed money to spur innovation.
SpaceX — short for Space Exploration Technologies Corp. — has made four cargo runs to the giant orbiting outpost some 200 miles (320 kilometers) above Earth. Just last month, its Dragon capsule splashed into the Pacific, returning nearly 2 tons of science experiments and old equipment.
Companies competing for the right to ferry station astronauts need to design a spacecraft that can seat a crew of four or more and be equipped with life support systems and an escape hatch in case of emergency. SpaceX has said it's designing a seven-seat spacecraft.
SpaceX and longtime NASA contractor Boeing Co. are "more or less neck and neck" in the competition, but there's a long way to go before astronauts can rocket out of the atmosphere on private spacecraft, said John Logsdon, professor emeritus of political science and international affairs at George Washington University.
Logsdon said progress by private companies is slower than anticipated mainly because Congress has not fully funded NASA's budget request for the effort. He said it's important for the U.S. to wean its reliance on Russia given the political tension over the annexation of Crimea.
"It's essential to have our own capability to transport people to space," he said. "This is an important step in that direction."