Tesla has started deliveries of the Chinese-made Model Y

Tesla's Model Y is displayed at Tesla's design studio Thursday, March 14, 2019, in Hawthorne, Calif. (Jae C. Hong / AP)

Tesla has begun rolling out locally made Model Y crossover vehicles in China, reaching an important milestone in the world's largest auto market.

The electric carmaker announced the news on Twitter on Monday, releasing photos of the SUV being purchased from a company showroom.

The Model Y is the second vehicle Tesla has made and sold in China, after deliveries of the Model 3 kicked off last year. Both lines are being produced at the company's sprawling Gigafactory in Shanghai, where manufacturing started in 2019.

The Model Y starts at 339,900 yuan (US$52,400) for the "long range" version, and 369,900 yuan ($57,000) for the "performance" version.

Deliveries began Monday in cities including Shanghai, Hangzhou and Wuhan, the company said in a Chinese social media post. To help customers feel more comfortable, staff also packed a "virus prevention" kit in the new vehicles, which included bottles of hand sanitizer, it added.

GOING BIG IN CHINA

China has increasingly become a critical part of Tesla's global strategy, with CEO Elon Musk once calling its factory there a "template for future growth."

In 2019, the company beat its own deadline to start making cars in China, kicking off trial production only 10 months after it broke ground on the plant. That boosted confidence that the company had the ability to hit delivery targets as it grew.

Tesla has said that the initial goal for the Shanghai factory is to make 250,000 cars a year, before ramping up to 500,000 units. It revealed last October that it had hit that first goal, while "continuing to expand" capacity significantly.

The company was also the first foreign automaker to be allowed to open a factory in the country without a Chinese partner, putting pressure on local players.

Tesla previously won a tax break for some of its cars, which helped make its prices more attractive to customers. It also lowered the price of its Model 3 to qualify for government subsidies.

The debut of the Chinese-made Model Y has been hotly anticipated, with the launch seen as another challenge to Chinese rival Nio, which sells its own line of electric SUVs.

Tesla has recently leaned more heavily on its Chinese operations, including a decision last October to start exporting Chinese-made vehicles to Europe.

It also has plans to push deeper elsewhere in Asia, including a launch in India that is expected to happen this year.

Meanwhile, the Chinese auto market is predicted to become even more crucial in the coming years. "By 2022, we believe [more than 40%] of Tesla's overall delivery sales could come from China, as this remains the main growth region going forward, followed by Europe, then the US," Wedbush analysts wrote in a note last week.

Serenitie Wang contributed to this report