The layoffs are "almost entirely" in salaried positions and won't impact Tesla's efforts to increase Model 3 production, Musk said.
Tesla's announcement comes a month after Musk announced a restructuring of Tesla's organizational chart.
Musk said that Tesla would provide laid off workers with "significant salary and stock vesting".
"As part of this effort, and the need to reduce costs and become profitable, we have made the hard decision to let go of approximately nine per cent of our colleagues across the company", Tesla said in an email to employees.
"These cuts were nearly entirely made from our salaried population and no production associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months", Musk tweeted. The areas were to be outfitted during the first half of this year and staffed by Tesla employees to demonstrate that its panels and batteries have mainstream appeal.
Tesla has not made an annual profit in its 15 years of doing business, and it has posted only two quarterly net profits.
Last week, Musk overcame an attempt to strip him of his role as chairman of Tesla's board, a plan introduced by a company shareholder who raised doubts about Musk's ability to manage multiple companies simultaneously. The firm has a sector weight rating and a $300 "fair value" price target on Tesla shares, which were up about 4% in pre-market trade Tuesday.
Musk also said that Tesla had decided not to renew a residential sales agreement with Home Depot (HD.N), and would focus instead on selling its solar products through its own stores and website.
"9 percent job cut is a good number and I don't think there will be more job cuts in the near term", Efraim Levy, analyst at CFRA Research said. Each time, after a few quarters of small profits, Tesla would ramp up production of another auto model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows.