I think you can change it to export to csv instead. Or you can try the custom export to excel module, I believe you can use .xlsx there (1 million rows). The limitation is really that of Excel so there's no way around it.
Unfortunately this is the limitation when using the built-in export to Excel functionality, as it will generate a XLS which has the mentioned restriction of 65535 lines.
An alternative could be to use Export to CSV instead, which doesn't have the limit. If it has to be an Excel export, you could take a look at the Excel Export module (here), which also supports exporting to XLSX. Though not as convenient as simply adding an Export button, the module is actually extremely powerful and allows you to define multiple reports from the runtime.
Edit: Marc beat me to it :)