U.S. electric car giant Tesla Inc. formally kicked off the large-scale delivery of its China-made Model 3 sedans to the public at its Shanghai Gigafactory on Tuesday.

Tesla Inc. CEO Elon Musk participated in the delivery ceremony and handed over Model 3 sedan keys to 10 customers. 

Addressing the audience, also with senior Shanghai government officials, Musk said he is impressed by how efficient the construction of the local factory and production of the Model 3 cars has been in China. 

He attributed the "incredible outcome" to his employees and expressed his gratitude toward the local government for its support.

Model Y's local production launches 

The U.S. electric vehicle maker also officially started work on a Model Y program at its Shanghai factory, scaling up its local production. 

Musk said the demand for the vehicle would probably outstrip that of all of Tesla's other models combined. 

He also said the company plans to form a design-and-engineering center in China so that Tesla can eventually develop a brand new car from there.

The electric car giant will continue to make a significant and increasing investment in China and promote China-made Tesla sedans to the world, the CEO said. 

News of Tesla's large-scale delivery sent the stock prices of its Chinese suppliers flying on Monday, and the uptrend continued on Tuesday.

Read more: Tesla's Model 3 price cut boosts its Chinese suppliers

"The localization of Tesla sedans will spring up the industrial chain of electric cars in China, just like the industrial chain rose by Apple in earlier years," Zhu Weiqi, a senior analyst at Shanghai-based Lingze Capital, told CGTN.

The company last Friday announced a price cut of 9 percent on its Model 3 cars, putting the retail price at 299,050 yuan (42,919 U.S. dollars) after the Chinese government set a 25,000-yuan subsidy for new-energy cars.

Local Chinese manufacturer NIO Inc.'s popular SUV ES6 is priced higher at 358,000 yuan, according to Zhu, giving Tesla a price advantage.

"The price cut makes Model 3 a better price performance," he said.

Tesla's Shanghai factory delivered the first batch of its China-made Model 3 sedans to 15 employees on December 30, less than a year after Tesla broke ground on the factory on January 7, 2019.

Read more: Tesla delivers first China-made Model 3 sedans in just under a year

As production speeds at the Chinese factory, it is expected that the company will see lower production costs in its China-made cars as more local suppliers get involved in Tesla's supply chain, which might make them even more competitive. Its China strategy has become its new growth driver. 

On Tuesday, Tesla's stock price surged by 3.88 percent to 469.06 U.S. dollars per share with a market cap of 84.55 billion U.S. dollars, which is just about 2.5 billion U.S. dollars less than that of General Motors and Ford combined.