Tesla founder and boss Elon Musk planned to mark the occasion with a ceremony at the company's plant in the city of Fremont near San Francisco.
Production of the electric car aimed at the broader market -- with a starting price of $35,000 -- will ramp up quickly, according to Musk, with 100 in August and 1,500 or more in September.
Tesla aims to produce 5,000 units of the Model 3 a week this year, and 10,000 units a week in 2018.
More than 375,000 customers have placed deposits to get on the waiting list for the Model 3, and anyone wanting one will have to wait at least until 2018.
Some analysts say that with the launch, Tesla may be reshaping the future of the auto industry.
Gene Munster, analyst with the research firm Loup Ventures, argues that Tesla may do for the auto sector what Apple did for smartphones and electronics.
"We believe we will eventually look back at the launch of the Model 3 and compare it to the iPhone, which proved to be the catalyst for the shift to mobile computing," Munster said in a recent research note.
Munster says Tesla will play a central role in "paradigm shifts" to electric and autonomous vehicles that could transform the sector.
While Tesla produced just 83,000 vehicles in 2016, it has achieved a market value of some $55 billion -- ahead of General Motors -- in anticipation that it will become a leader in the industry.
Munster estimates that Tesla can reach profitability by 2012 and that 2023 will be "a breakout year for the company" with some 1.6 million vehicles produced.
Tesla currently sells only two luxury models of its electric vehicles: the "Model S" sedan and the "Model X" SUV whose base price starts at around $80,000.
A major test
Success with the Model 3 could ease concerns about the ability of Tesla to grow significantly.
Designed to be smaller, simpler and easier to assemble than its bigger sibling, the Model 3 is also priced to compete in the heart of the auto market. The Model 3 offers fewer options than its predecessors, but is infused with the same self-driving technology. The vehicle's battery was designed to keep it going for "at least 215 miles" (345 km) before needing to be recharged, according to Tesla.
A big question for Tesla is whether it can ramp up production to meet demand and whether rivals will cut into the electric vehicle market. Swedish carmaker Volvo recently announced it will phase out gasoline-powered vehicles in favor of hybrids or electrics.
General Motors beat Tesla to market with its Bolt electric car but recently halted production to ease inventories in view of weak sales. Musk's vision aims to wean the industry off fossil fuels and ties in with his solar energy and other transportation investments.
Musk runs solar energy firm SolarCity, and is building rechargeable batteries to power homes as well as cars. His Boring Company is part of a vision for near-supersonic rail travel via low-pressure tubes, which he laid out in a hyperloop white paper he made open to other entrepreneurs.