His exit came as Mr Musk said Twitter would have lost $3bn in cash if he had not embarked on mass sacks after taking over.
“This company is like, basically, you are in a plane that is headed toward the ground at high speed with the engines on fire and the controls don’t work,” he said during an appearance on Twitter spaces late on Tuesday night.
The billionaire said Twitter now had “a little over 2,000 people”, down from around 7,500 staff when he took over in October.
Mr Musk’s deal to acquire the company has laden it with almost $13bn of debt, requiring interest payments of around $1.5bn per year.
Following the deep cuts, Mr Musk said he thinks the business will, in fact, be okay next year.
Mr Hotz, 32, was given a job at Twitter in November after voicing support for Mr Musk’s demand that Twitter staff commit to “extremely hardcore” working conditions.
The engineer rose to prominence at the age of 17 for being the first person to “unlock” an iPhone so it could work on any mobile carrier. He subsequently hacked the Sony PS3, before later finding work in the self-driving car industry.
He was hired to improve Twitter’s search function and to remove a pop-up that appeared for users who are not logged in to the social network. The pop-up problem appears to have been fixed.