The Model 3 sedan passed all regulatory requirements for production two weeks ahead of schedule, Chief Executive Elon Musk tweeted late on Sunday.
The announcement allayed worries about Tesla's ability to meet its production goals as earlier launches of its Model S sedan and Model X sports utility vehicle were plagued by delays and initial quality issues.
"Production grows exponentially, so Aug should be 100 cars and Sept above 1500," Musk tweeted.
The Palo Alto, California-based company plans to ramp up Model 3 production to reach a target 500,000 cars per year in 2018.
Musk also said he expected "to complete SN1 on Friday (July 7)."
Handover party for first 30 customer Model 3's on the 28th! Production grows exponentially, so Aug should be 100 cars and Sept above 1500.— Elon Musk (@elonmusk) July 3, 2017
The term "SN1", taken to be serial number 1, is the first car off assembly line for sale, a person familiar with the matter confirmed to Reuters.
Priced at $35,000, Model 3 is a smaller, more affordable version of Tesla's Model S sedan with fewer features. Model S prices start at $69,500 in the United States.
Customers who have already ordered Model 3 will start getting deliveries as production ramps up, while deliveries for new reservations will start from mid-2018 or later, according to Tesla website.
A lot rides on the success of Model 3 as the lower-priced car is seen helping turn the cash-losing company into a profitable one.
Reporting by Supantha Mukherjee and Subrat Patnaik