In an email to staff on Friday, Musk said that he planned to cut 10 percent of the company's work force.
The number of hourly employees will increase, Mr. Musk said in the email, which was reviewed by The New York Times. He said that the head count would be reduced by 10 percent.
The news was reported earlier by the news agency. After the article was published, the share price of the company fell.
As sales have increased and it has built new factories, the staff has grown substantially. At the end of last year, the company had 99,000 employees. Two years ago, the company had 48,000.
The two companies did not respond to questions.
Mr. Musk told employees at his companies that they would have to work at least 40 hours a week.
The more senior you are, the more visible you should be. I spent a lot of time in the factory in order to see those on the line. If I didn't do that, it would have been bankrupt.
The announcement thrust Mr. Musk and his companies into a heated debate over how to restore normal after two chaotic years of the Pandemic. Concerns were raised that he might drive away top performers who prefer to work from home.
The layoffs won't be the first of their kind. Some workers were dismissed by the company in the last two years.
The company has a high stock price. The company has a market value of more than $728 billion. The risks that the company faces from growing competition, accusations of racial discrimination, and production problems at its factory in China have caused the company's shares to fall.
Critics think Mr. Musk is trying to distract from the fact that he could hurtTesla. Some investors are concerned about the lack of independence from the chief executive of the company to check his impulses.
Andrew Poreda, a senior analyst who specializes in socially responsible investing, told The Times last month that there were a lot of red flags about the company. There aren't many checks and balances.
The success of Mr. Musk and his management style has earned him admirers but also made him a lightning rod for critics. Many of the top executives at the company have gone on to work at other companies.
The work ethic in China was praised by Mr. Musk, who suggested that workers in the US were lazy. They won't just be burning the oil. He said in an interview that Chinese workers would be burning oil. They won't leave the factory style of thing. People in America don't want to go to work.
Some analysts still think that the company will do well. The plan to reduce the work force likely shows that the company over hired a year ago, according to a note from a senior equity analyst.