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Article: Staff complain that xAI is flailing because of constant upheaval

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5 / 10

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Elon Musk has ordered another round of job cuts at his AI startup, xAI, due to frustration with its underperforming coding product. Managers from SpaceX and Tesla have been brought in to audit the company, leading to the departure of several more cofounders.

The restructuring is an attempt to catch up with rivals like Anthropic and OpenAI, whose AI coding tools have seen significant success. Musk is applying intense pressure as he works toward a potential historic stock market listing for the combined SpaceX-xAI entity.

The internal review has focused on issues like training data quality, identified as a key reason xAI's product lags behind competitors. This has resulted in the firing of employees deemed inadequate and the exit of senior technical staff.

Main topics: xAI restructuring and job cuts; performance issues with AI coding product; intervention by SpaceX/Tesla managers; competition with Anthropic and OpenAI; departures of cofounders; goals for a SpaceX-xAI merger and listing.

Original URL

https://arstechnica.com/ai/2026/03/staff-complain-that-xai-is-flailing-because-of-constant-upheaval/

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Ars Technica

Published Date

2026-03-14 07:14

Fetched Date

2026-03-14 04:30

Processed Date

2026-03-14 04:31

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Present

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Elon Musk has ordered another round of job cuts at xAI after growing frustrated with the poor performance of its coding product, forcing out several more cofounders and parachuting in “fixers” from SpaceX and Tesla to audit the startup.
The latest overhaul of the 2-year-old startup follows the success of Anthropic and OpenAI, whose AI coding tools have shaken up the software industry, multiple people familiar with the decisions said.
Musk has dialled up the pressure after merging SpaceX with xAI in a $1.25 billion deal, as he attempts to meet a June deadline for what could be the biggest stock market listing in history. The world’s richest man has said his goals are to launch AI data centers into space, build factories on the Moon, and colonize Mars.
Musk has relentlessly pushed the heavily loss-making AI startup to catch up with rivals, but so far its Grok chatbot and coding product have failed to gain traction with paying individual users or businesses.
“xAI was not built right first time around, so is being rebuilt from the foundations up,” Musk posted on X on Thursday. “Same thing happened with Tesla.”
SpaceX and Musk did not immediately reply to requests for comment.
Managers from SpaceX and Tesla have been seconded to review xAI employees’ work and have fired some after deeming their efforts inadequate, said two people with direct knowledge of the matter.
One area of focus has been the quality of the data used to train the models, a key reason its coding product lagged behind Anthropic’s Claude Code or OpenAI’s Codex.
The review has pushed out two more cofounders. Zihang Dai, one of the most senior members of the technical staff, who had publicly acknowledged that xAI was behind on coding, departed this week.
Guodong Zhang, who had run pre-training of Grok models, told colleagues that he was leaving after being blamed for the issues with the coding product and relieved of his primary duties by Musk, two people familiar with the decision said. He confirmed that Thursday was his last day in a post on X.