The company's chief executive Elon Musk has revealed the electric vehicle - which is priced at $35,000 - will go into production later this week after it passed regulatory tests ahead of time.
Musk wrote on Twitter: "Model 3 passed all regulatory requirements for production two weeks ahead of schedule.
"Expecting to complete SN1 on Friday. Looks like we can reach 20,000 Model 3 cars per month in December. (sic)"
The car - which has a standard five seats - will be able to travel over 200 miles on one charge and will have a sporty edge to it, with its ability to be able to go from 0 to 60mph in a few seconds.
The company is aiming to make 5,000 of the cars per week by the end of the year and 10,000 a week in 2018.
Writing about Model 3 on their website, they shared: "Model 3 combines real world range, performance, safety and spaciousness into a premium saloon that only Tesla can build.
"Our most affordable car yet, Model 3 achieves 215 miles of range per charge while starting at only 35,000 USD before incentives. Model 3 is designed to attain the highest safety ratings in every category."
Meanwhile, Musk previously revealed he is excited for the release of Model Y, a small crossover car coming in two to three years.
Speaking at a shareholder meeting in Mountain View, he said: "I am really excited about Model Y. We are aiming for that to hit the roads in 2019, approximately. And probably the demand for Model Y will exceed the demand for Model 3."