Elon Musk's xAI Lays Off 500 Employees Tasked With Training Grok: Report

Elon Musk's xAI, the AI startup founded to rival giants like OpenAI, has laid off approximately 500 employees from its data annotation team. This move, which affects about one-third of the team's 1,500 members, targets generalist AI tutors responsible for labelling, contextualising, and categorising vast amounts of raw data to train xAI's flagship chatbot, Grok. According to a report by Business Insider, the layoffs were communicated via an internal email. 

The email sent to impacted employees on Friday evening announced that xAI is reducing its emphasis on general AI tutor roles and shifting to prioritise and significantly expand its specialist AI tutor workforce.

"After a thorough review of our Human Data efforts, we've decided to accelerate the expansion and prioritisation of our specialist AI tutors, while scaling back our focus on general AI tutor roles. This strategic pivot will take effect immediately. As part of this shift in focus, we no longer need most generalist AI tutor positions, and your employment with xAI will conclude," the email read. 

Affected workers, primarily those handling diverse tasks without deep domain-specific knowledge, were promised pay through the end of their contracts or November 30, 2025, but their access to company systems was revoked instantly. One anonymous employee described the timing as "pretty shady," noting it occurred after hours on a Friday, catching many off guard.

Notably, xAI's data annotation team has been pivotal since the company's inception in 2023, forming its largest workforce segment and playing a crucial role in enhancing Grok's understanding of complex real-world contexts. Specialists in areas like STEM, coding, finance, medicine, and even niche fields such as video games and web design remain essential, and the company has vowed to "surge our Specialist AI tutor team by 10x."

Specialist AI tutors at xAI are adding huge value. We will immediately surge our Specialist AI tutor team by 10x!

We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI!https://t.co/htpc2RijLG

— xAI (@xai) September 13, 2025

"Specialist AI tutors at xAI are adding huge value. We will immediately surge our Specialist AI tutor team by 10x! We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI," read a post by xAI on September 13.