SpaceX unveiled a re-usable spacecraft which it says will be able to take-off and land anywhere on Earth.
The seven-seater Dragon Version 2, or V2, comes equipped with side-mounted thrusters and legs to allow it to land vertically anywhere on Earth, instead of parachuting down into the ocean.
"That is how a 21st century spaceship should land," Musk said to an audience at SpaceX's California headquarters on May 29.
Over 32,500 people watched the Dragon unveiling on a live SpaceX webcast.
"It is conceivable that we could do the first flight to orbit," said Musk. "We would initially do it without people at the end of next year and then the first flight with people would be in 2016 and we think that would be very achievable."
NASA retired its space shuttle fleet back in 2010. Since then, the American space agency has had to rely on Russian spacecraft to fly astronauts into orbit.
Dragon, which launches on a SpaceX Falcon 9 rocket, is competing with three privately owned space taxis to win NASA development funds and launch contracts, according to Reuters.
Recently NASA has been working with Boeing, SpaceX, and privately owned Sierra Nevada on commercial programs to develop new spaceships.
By 2017, NASA wants to break Russia's monopoly on station crew transports. The U.S. pays over $60 million per person for round-trip flights on the Russian Soyuz capsule.
Musk hopes to bring down the cost of flying in space by reusing both the Falcon 9 rockets and Dragon spaceships.
NASA expects to choose one or two space taxi designs by this summer for test flights and final development.
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