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Elon Musk says people are canceling Tesla Model 3 orders because it's like a '1.5 hour wait for hamburgers' at a restaurant


Model 3 Blue Driving EMBARGOED DO NOT USE
Model 3 Blue Driving EMBARGOED DO NOT USE

(Tesla's Model 3 starts at $35,000 and can drive 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 he was quick to add that it's a relief for the electric carmaker.

"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 admitted it will be difficult to meet its high demand. Total orders for the electric sedan net 455,000 following the cancellations.

Tesla aims to produce 20,000 Model 3 cars a month 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 only turning a profit 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 every day since the handover event on Friday. 

The challenge, as Musk admits with his hamburger analogy, will be churning them out fast enough so people on line don't continue to walk away.

NOW WATCH: Watch Elon Musk reveal Tesla's long-awaited Model 3



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