"If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal," he said.
Musk said the move included all of Tesla's patents, including several hundred current ones and several thousand in the future.
Investors should not worry that the decision would hit Tesla's bottom line, he told reporters on a conference call.
"It doesn't really harm Tesla but helps the industry," Musk said on the call, "and I think actually it will help Tesla, mostly with respect to attracting and motivating the world's best technical talent."
He said investors should be more concerned about whether a company is able to attract and motivate the best talent than the contents of its patent portfolio.