It was unveiled by the billionaire entrepreneur during an event at Tesla's design studio in Hawthorne, California, last night, 14 March 2019.
"It has the functionality of an SUV, but it will ride like a sports car," Musk said at the event. "This thing will be really tight on corners."
More compact than the Model X SUV, and larger than the Model 3, the Model Y vehicle will be the electric carmaker's fifth model.
A high-efficiency powertrain and ultra-responsive motors will enable the car to reach zero to 60 miles per hour (mph) in just 3.5 seconds, reaching a top speed of up to 150 mph.
Prices for the Model Y will start at $39,000 (£29,400) for a Standard Range version, boasting a battery range of 230 miles.
However customers will have to wait until Spring 2021 before they can buy the standard model. More expensive versions of the car with longer battery range will go on sale first in Autumn 2020.
This includes the Long Range version for $47,000 (£35,500), which will be able to travel up to 300 miles on a single charge, the Dual-Motor All-Wheel Drive model for $51,000 (£38,500), and the Performance version for $60,000 (£45,300).
Designed for "maximum versatility and safety", Musk claims that the Model Y will be "the safest midsize-SUV in the world by far."
"Built from the ground up as an electric vehicle, the low centre of gravity, rigid body structure and large crumple zones provide unparalleled protection," the company explained.
According to Tesla, the aerodynamic design of the Model Y and its battery technology make it highly efficient in terms of energy usage, allowing drivers to travel further with less energy than other electric vehicles on the market.
Raised seating and a panoramic glass roof give a more spacious feel to the interior, and offer an expansive view from all seven seats in the vehicle.
Further storage is provided in a boot, or trunk, at the front and split-folding second-row seats – a total of 1.9 cubic metres (66 cubic feet).
Like the Model 3, no keys are required for the Model Y. Instead, the car connects to the driver's smartphone for entry and exit, and features a 15-inch touchscreen interface inside that is used to control the car.
The Model Y will also be able to connect to the Tesla Mobile app to enable features including remote unlocking, autonomous parking and location tracking.
Model Y will also be compatible with Tesla's Supercharger network – the "world's fastest" charging stations for electric cars, which include over 12,000 Superchargers across 36 countries.
Tesla was mired in controversy last year when an Apple employee was sadly killed in a crash that occurred whilst a Tesla Model X vehicle was in self-drive mode.