Tesla's Model 3 starts at $35,000 and can go 220 miles on a single charge. Tesla

Tesla CEO Elon Musk said Wednesday that 63,000 people cancelled their Model 3 reservations over the course of more than a year — but was quick to add that it's a relief for the electric-car maker.

"It's like if you're a restaurant and you're serving hamburgers, and there's like an hour-and-a-half wait for hamburgers — do you really want to encourage more people to order more hamburgers?" Musk said.

The Model 3 is Tesla's first mass-market vehicle, and Musk has already said it would be difficult to meet high demand for the car. Total orders for the electric sedan net 455,000 after the cancellations.

Tesla says it aims to produce 20,000 Model 3 cars per month starting in December, a tough goal for a company that has struggled with production for its luxury cars. Musk has said the first six months of manufacturing the Model 3 will be "production hell."

There's a lot riding on Tesla's Model 3 launch.

Tesla's market cap has rivaled that of Ford, Fiat Chrysler, and General Motors this year, despite selling a fraction of vehicles and turning a profit only twice since its 2010 initial public offering. Shareholders will look for Tesla to turn a healthy margin on the Model 3 at a time where consumers favor larger SUVs.

Tesla isn't struggling to find demand for the Model 3, though. The company has done zero marketing and is averaging 1,800 orders a day since the handover event on Friday.

The challenge, as Musk says with his hamburger analogy, will be churning the Model 3 out fast enough so that people in line don't continue to walk away.