While the Navy was testing the first two prototypes, they suggested that the third be fitted with the 700 kW (940 hp) Nakajima Sakae 12 engine instead. Mitsubishi had its own engine of this class in the form of the Kinsei, so they were somewhat reluctant to use the Sakae. Nevertheless when the first A6M2 was completed in January 1940, the Sakae's extra power pushed the performance of the plane well past the original specifications.
The new version was so promising that the Navy had 15 built and shipped to China before they had completed testing. They arrived in Manchuria in July 1940, and first saw combat over Chungking in August. There they proved to be completely untouchable by the Polikarpov I-16s and I-153s that had been such a problem for the A5Ms currently in service. In one encounter, 13 Zeros shot down 27 I-15s and I-16s in under three minutes without loss. After hearing of these reports the Navy immediately ordered the plane into production as the Type 0 Carrier Fighter, Model 11. Reports of the Zero's performance filtered back to the US slowly. There they were dismissed by most military officials, who felt it was impossible for the Japanese to build such an aircraft.
After the delivery of only 65 planes by November 1940, a further change was worked into the production lines, which introduced folding wingtips to allow them to fit on aircraft carriers. The resulting Model 21 would become one of the most produced versions early in the war. When the lines switched to updated models, 740 Model 21s had been completed by Mitsubishi, and another 800 by Nakajima. Two other versions of the Model 21 were built in small numbers, the Nakajima-built A6M2-N "Rufe" floatplane (based on the Model 11 with a slightly modified tail), and the A6M2-K two-seat trainer of which a total of 508 were built by Hitachi and the Sasebo Naval Air Arsenal.