Various government officials including Mayor Ying Yong and Zhu Zhisong, deputy secretary-general of the Shanghai municipal government, were among the dignitaries attending Tuesday's event.
The price tags for the China-made Model Y will be between 444,000 yuan and 535,000 yuan, Tesla said Tuesday.
The announcements were made by Musk while delivering the first Model 3 vehicle from the Shanghai plant to the public.
Construction of Tesla's first plant outside the United States began in January and production started in October.
Revenue from China already accounted for about 11% of Tesla's total for the quarter ended September, up from 6% a year ago, according to Bloomberg.
The entrepreneur danced and gave out high-fives on a stage as sleek Model 3 sedans - the company's mid-price, mass-market offer - were driven up one by one and presented to buyers who jumped into the back seats before being driven away at the plant.
But he was there to celebrate delivering the first cars from Tesla's new factory.
The China plant is already assembling 1,000 cars a week and aims to double that rate over the next year, Song Gang, the manufacturing director at the facility, said December 30.
By reducing prices, Tesla is looking to gain a competitive edge over Chinese startups like Nio and Xpeng. But locally built vehicles are not only exempt from taxes on auto purchases but also qualify for subsidies, allowing Tesla to sell the Chinese-made Model 3 for less than 300,000 yuan. The sale price will be announced later, the website says.
The Model Y will have five seat and seven seat editions.
He predicted that "ultimately Tesla Model Y will have more demand than probably all the other cars of Tesla combined", with his voice cracking with emotion at times while talking about the progress of the Shanghai factory.
Currently, Tesla's model range all occupy their specific segments with limited competition between models. "After all, it has been there for more than a decade", said Zhang. The California automaker is widely recognized as a high-tech brand among Chinese consumers, he said. "But sometimes they don't come in", said Qin.
Underscoring investors' confidence in Musk and his company's future growth, its market capitalization has outpaced its USA rivals, even as their businesses dwarf Tesla's. "It will not take long before Audi, Mercedes and BMW recognize the new competitor", said Zhang.
China is the biggest global market for electrics, but Tesla's manufacturing launch comes at a time when sales are sagging following the end of government subsidies in mid-2019.
Tesla plans to increase production capacity to 500,000 a year after the subsequent phase, although it is not clear when exactly Tesla will achieve these goals. No, we are not.
Musk did not share any other details about a new electric vehicle, aside from saying that it is something kind of radical that nobody expected, like the Tesla Cybertruck.
BJEV is making every effort to move upward and has started trial production of models under its Arcfox brand in a plant built with Canadian automotive supplier Magna.