What this error message is saying is that in order to use the state space function (ss) Simulink has to call the MATLAB workspace. As the error message states you can get around this by declaring the function extrinsic, for example:
function y = fcn(u)
eml.extrinsic('ss')
% Code here
y = u;
The main restriction this will have (in addition to the computational time) is you will no longer be able to generate code (C/C++) from the Simulink model using Real-Time Workshop due to the dependencies on core MATLAB functionality.
A better solution would be to use the state space blocks provided as part of the standard Simulink library (Simulink/Continuous or Simulink/Discrete) to construct your state space model.
