Elon Musk was cheered as he oversaw the handover of Tesla's first German-made cars at its Gruenheide plant on Tuesday, marking the start of the U.S. automaker's inaugural European hub just two years after it was first announced.

"This is a great day for the factory," Musk said, describing it as "another step in the direction of a sustainable future."

The Tesla CEO danced and joked with fans as the new vehicles were unveiled through a glitzy, neon-lit Tesla-branded tunnel.

German Chancellor Olaf Scholz, who also attended the event, lauded the "gigafactory" as the future of the car industry.

At full capacity, the plant will produce 500,000 cars a year.

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