Tesla Model 3 delivery ceremony in Shanghai Photo: Yanghui/GT

US electric-car giant Tesla on Tuesday delivered made-in-China Model 3s to Chinese customers in Shanghai, and announced it would start producing Model Y cars at its Shanghai plant.

Tesla CEO Elon Musk and Shanghai Mayor Ying Yong attended the ceremony.

At the event, Musk said Tesla intends to increase its already significant investment in China, producing the Model 3, the Model Y and other future models in China.

"Something that will be super cool is creating a China design center to design an original car in China for worldwide consumption," Musk said. "I think the Model Y will have more demand than probably all of the other cars that Tesla can provide," he said.

Musk also said Tesla could try something more radical, like a cyber truck - "something cool and different that the world has not seen before."

Wearing a black t-shirt, Elon Musk thanked the Shanghai government during the delivery ceremony for the made-in-China Model 3 cars.

Musk danced along to applause from his Chinese audience as he delivered made-in-China Model 3s to 10 mainland customers.

The deliveries came after the company announced a price cut on January 3. According to Tesla's website, the price of the Model 3 was reduced by about 16 percent to 299,000 yuan ($42,963).

Cui Dongshu, secretary-general of the China Passenger Car Association, told the Global Times on Tuesday that the number of vehicles being delivered in the first quarter of 2020 shows that orders are insufficient, though the cars are not as popular among domestic consumers as they are in the US.

With more components of Tesla vehicles being sourced in China, and with the increase in production capacity, there is room for Tesla to reduce the prices of vehicles produced in China, Cui said. He noted that the price of the Tesla Model 3 may be cut further to 250,000 yuan, or by about 17 percent, in the second half of 2020.

The Model 3 has reached the 30 percent domestic rate. Its localization rate is expected to reach 70 percent by mid-2020, and nearly 100 percent by the end of the year, according to Tesla.