Tesla has reported it bought about $1.5bn (£1.1bn) of the cryptocurrency Bitcoin in January and expects to start accepting it as payment in future.
The news caused the price of Bitcoin to jump 17% to $44,220, a record high.
Tesla said it was trying to maximise returns on cash that is not being used in day-to-day running of the company.
It comes days after Mr Musk added “#bitcoin” to his Twitter profile page, which drove up the price.
He removed it days later, but has continued talking up Bitcoin and other cryptocurrencies, including Dogecoin, which jumped 50% after his endorsement.
Some analysts said Tesla’s investment could be a game-changer for the cryptocurrency.
“I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move,” said Eric Turner, vice-president of market intelligence at cryptocurrency research firm Messari.
“One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla, or even just an S&P 500 fund, has exposure to it as well.”
But Neil Wilson, chief market analyst for Markets.com, warned that Bitcoin was a “very volatile” cryptocurrency.
“Tesla is now starting to take on big [foreign exchange] risk – this may not worry a lot of investors, but some conservative types might be concerned,” he said.