xAI is experiencing a wave of layoffs: two co-founders have left after Musk’s accusations that Grok has been delayed compared to competitors

Elon Musk is restructuring xAI: layoffs, audits and new priorities

In 2024 billionaire Elon Musk is tightening control over his projects by consolidating them into a single ecosystem. Tesla invested nearly two billion dollars in xAI, and SpaceX acquired the last of Musk’s startups. The goal is to create a joint AI data center (DC) that will be located on space assets. However, xAI itself was “misbuilt” from the start, and Musk decided to rebuild everything from scratch.

What happened
1. Layoffs at xAI

According to Bloomberg and the Financial Times, Musk initiated a mass layoff of staff. Executives from SpaceX and Tesla were sent to the startup to conduct an audit, after which many employees, including two co‑founders (Zihang Dai and Guodong Zhang), left.

2. Data quality review

The audit focused heavily on the datasets used to train xAI models. Quality discrepancies led to firings even among senior personnel.

3. New leadership

- *Toby Pohlen* (former DeepMind researcher) was appointed head of the Macrohard project – an automatic code generator – but stayed less than 16 days.

- *Ashok Elluswamy*, head of AI development at Tesla, replaced him and is responsible for applying autopilot experience to working with the Grok language models.

4. Employee motivation

Internal conversations show that constant reshuffling and layoffs erode team morale and hinder the startup’s potential.

Why Musk acts this way
- Competition with OpenAI and Anthropic

The competitors’ successes force Musk to rethink xAI’s strategy so he doesn’t fall behind.

- SpaceX IPO by June

To attract investors, the company must show a clean and efficient structure.

- Infrastructure plans

In Memphis a DC has already been built with over 200,000 accelerators; it is planned to grow to one million.

Future plans
- Implementation of X data

After integrating xAI with the social network X, the platform’s data are now used to train the Grok chatbot.

- Growing vacancies

Job openings in the company are increasing; recruiters sometimes revisit previously rejected candidates with higher salaries.

- Retaining key talent

Despite mass layoffs, major AI specialists continue to leave xAI due to high workload and attractive offers from competitors.

Conclusion
Musk is actively restructuring xAI: eliminating “inefficiency,” bringing in experts from SpaceX and Tesla, revising model training strategies, and building a large DC. All of this aims to enable the company to respond quickly to AI market challenges and compete successfully with industry leaders.