Musk informed his Tesla team about the decision over an email that was sent to all employees, Electrek reported on Thursday.
The new cost-cutting initiative involves examining every payment, including "parts, salary, travel expenses, and rent."
Referencing to the loss of $702 million that the automaker suffered last quarter, Musk said the step is "extremely important".
Slowing sales were bad news for Tesla because the company always needs cash in order to pay its sizable debts, according to analysts.
Tesla had a $2.2 billion cash position at the end of last quarter and Musk said that it would not last that long with their burn rate.
"This is a lot of money, but actually only gives us about 10 months at the Q1 burn rate to achieve breakeven," the report quoted Musk as saying in the email.
The Tesla CEO has granted the employees a few weeks to regularise, own and improve their work-related expenses.
"This is hardcore, but it is the only way for Tesla to become financially sustainable and succeed in our goal of helping make the world environmentally sustainable," Musk added.
The new cost-cutting effort comes after Tesla laid off many employees in another attempt to reduce cost, the report added.
Earlier this month, Tesla also closed a massive $2.7 billion capital raise in order to support its operations.
Meanwhile, social media was taken by storm when Musk revealed that he himself puts in 90-120 hours of work per week to keep Tesla alive.
Last year, after Tesla first achieved a Model 3 production rate of 1,000 units per day, Musk turned his focus to costs and encouraged everyone to make contributions.
Currently Tesla's market value is $61 billion and Musk has an estimated net worth of $20.1 billion, making him the 80th richest person in the world.