Elon Musk’s xAI Fires 500 Employees? Report Suggests Major Layoffs

Elon Musk’s xAI has reportedly laid off about 500 employees from its data annotation team, here's why.

Edited By: Divya | Published By: Divya | Published: Sep 13, 2025, 11:08 AM (IST)

Written By Divya

Elon Musk’s AI company, xAI, has reportedly laid off around 500 workers from its data annotation team, according to a Business Insider report. The team, often described as “generalist AI tutors,” played a major role in training Grok, xAI’s chatbot, by labeling and categorizing raw data.Also Read: Elon Musk Shows How Grok Imagine Can Turn Your Odd Ideas Into Shareable Talking Videos

As per the report, emails sent to staff on 12th September’s night to inform them about the downsizing, with access to company systems cut off immediately. Affected workers will remain on payroll until the end of their contracts or November 30.Also Read: Elon Musk's X Launches XChat For All Users With Security Features And New Tools

Why The Restructuring Happened

In its email, xAI explained the move as a strategic shift. The company said it plans to expand its “specialist AI tutor” group while scaling back generalist roles. “After a thorough review of our Human Data efforts, we’ve decided to prioritize specialist tutors,” the message reportedly read, and the report quoted. Interestingly, shortly after the layoffs, xAI posted on X (formerly Twitter) that it is hiring and intends to grow its specialist tutor team by “10X.”Also Read: Elon Musk’s xAI Launches Grok Code Fast 1 With Agentic Coding Abilities, Free For A Week

The reduction didn’t come out of nowhere. Reports suggested that earlier in the week, several senior staff had their accounts deactivated. Employees were also asked to complete tests assessing skills in areas such as STEM, coding, finance, medicine, and even Grok’s “personality and model behaviour.” These assessments were said to help sort staff into new roles.

Still, some employees expressed frustration with the sudden notice and late timing of the tests. Screenshots from Slack channels showed several workers questioning the process, with at least one losing account access shortly after raising concerns.