Rashad Charjuan Owens allegedly tore through the crowd while drunk, running over people and hitting other cars. At least 23 others were injured.
Police caught Owens, 21, after an alleged foot chase, and Tasered him. His bond was set at $3 million.
Authorities have not released names of the dead, but they were a Dutch man on a bicycle and a local woman on a moped, Austin Police Chief Art Acevedo said.
MassiveMusic, a music agency with offices around the world, posted a statement on its website identifying the company's Amsterdam-based creative director, Steven Craenmehr, as killed Thursday in Austin.
"During the eight years that Steven worked for MassiveMusic, we got to know him as an unstoppable force, full of life, love and laughter," it said. "This is an irreplaceable loss for the MassiveMusic family, and we are grateful for the years we spent with him. Our thoughts are with Steven's family and friends."
Owens allegedly plowed through a barricade while attempting to flee police and and struck crowds listening to music just after midnight Wednesday.
Close calls for many
Some people escaped by a matter of inches.
Pablo Vazquez said the suspect drove right past him.
"The car barely missed me ... I was less than a foot away," Vazquez told CNN's New Day.
"I saw some folks die."
The scene was grisly.
"It looked like something out of a movie," Russ Barone said. "A few people lying on the street ... with their friends around them trying to get them up, trying to get them back to life. Hopefully, they are."
He said people bled in the streets.
"I've never seen nothing like it. I felt like I was at a war or something," Barone said. "I was down here for the music ... we were having the best time ever. And then it turned into the worst thing I've ever seen."
Twenty-three others were initially hospitalized, some with multiple internal injuries. Most of the victims are in their 20s, said Dr. Christopher Ziebell, medical director at the University Medical Center Brackenridge.
Ziebell said it was fortunate the incident occurred so close to the hospital, and applauded the Travis County paramedics, who had just undergone training for a similar scenario.
Capital murder is Texas' highest offense, punishable by the death penalty. The car hit pedestrians, a moped, a taxi, a bicycle and a van, Acevedo said.
Owens may also face multiple counts of aggravated assault by vehicle, Acevedo said.
The incident began when an officer noticed a man driving in the wrong direction on a one-way street shortly after midnight.
A patrol officer attempted to stop the car near a crowded gas station, Acevedo said. The driver, the chief said, allegedly acted as if he was pulling over into the gas station, but he continued through the parking lot and exited, accelerating down the street.
The officer attempting to pull him over couldn't follow him because the parking lot was so crowded, Acevedo said. Another officer working barricade control had to jump out of the driver's way as he allegedly accelerated for about two blocks, striking pedestrians and vehicles, the chief said.
Photos and video posted to social media showed people sprawled on a street for about a block with first-responders kneeling over them. In one instance, paramedics are seen performing CPR.
Witnesses on a YouTube video said the car sped through the crowd, tossing some victims into the air and knocking others down.
Acevedo urged those posting videos on social media to turn them over to authorities instead.
South by Southwest is an annual event that features film, interactive and music festivals, and draws tens of thousands of people to the Texas capital every year.
CNN first learned of the incident via posts on Twitter.
CNN's Justin Lear, Eliott C. McLaughlin, Jason Hanna, Jessica Moskowitz, Ben Brumfield, Cristy Lenz and Maria White contributed to this report.
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