The announcement follows recent cost-cutting measures the company has made in a bid to reduce the price of its products and boost margins.
Tesla shares fell 13 percent by the end of trading Friday.
In an email to employees, Musk said the company faces a "very difficult" road ahead in its long-term goal to sell affordable renewable energy products, noting the company is younger than other players in the industry.
"Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months," Musk said.
"Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause."
You can read the full text of Musk's note to employees here.