Elon Musk’s xAI is struggling to sell its Grok AI tools to large companies. The main reason is a lack of experience in business sales. The primary cause is the absence of experience in business sales. Although competitors in the industry, such as Google and OpenAI, have been engaged in business transactions with large corporations for some time, this is a learning experience for xAI, resulting in a slow adoption rate among customers.
According to a report by The Information, xAI’s current customers are mostly running small tests of its AI tools rather than using them across their entire businesses. These small trials, including those with Morgan Stanley and Palantir, bring in only a few million dollars for the Musk-owned company. To compare, xAI rivals like Google and OpenAI have secured much larger deals.
It's also important to note that several of the companies showing interest already have a history of working with Musk or his other businesses, suggesting the companies are struggling to find new clients outside his existing circle, the report adds.
The report also cited Adam Mansfield, a practice leader at UpperEdge who advises large companies on cloud and software negotiations, to claim that his clients are not using or seriously considering Grok for business. Executives are reluctant to choose vendors without established enterprise track records, preferring to evaluate results from trusted suppliers like Microsoft before exploring other AI tools.
Meanwhile, Palantir chief architect Akshay Krishnaswamy said the company offers Grok alongside models from OpenAI, Anthropic, and Google through its Palantir AI Platform. Palantir also uses Grok and other models internally for logistics, recruiting, and operational tasks. Krishnaswamy referenced a May announcement regarding Palantir's partnership with xAI and investment firm TWG Global to develop AI solutions for financial services.
How Elon Musk’s xAI is planning to expand Grok’s enterprise business
According to the report, xAI is working to expand its business customer base. In September, xAI added Grok to Azure AI Foundry, a Microsoft cloud service that allows developers to choose from various AI models, including those from OpenAI, Anthropic, and DeepSeek.
xAI has also begun selling Grok business subscriptions for $30 per month on Amazon Web Services' Marketplace. However, xAI has not yet made Grok available on Bedrock, which is AWS's leading AI service for developers that offers models from many companies, including OpenAI and Anthropic, similar to Microsoft's Azure Foundry.
There are indications that xAI may collaborate more closely with AWS this month. xAI hired a salesperson from AWS who stated on LinkedIn that he would focus on selling xAI products to AWS customers, the report added.
Like other major AI companies, xAI also views the US government as an essential customer. During the summer, xAI was among several AI companies that signed deals worth up to $200 million each with the Department of Defence. However, a generative AI platform the Pentagon launched in December for military personnel initially included only Google's Gemini.
Musk's other companies represent potential customers for xAI, though they are not guaranteed to become major users.
For example, Tesla includes the Grok chatbot in its vehicles and is adding Grok to its Optimus robot. However, Tesla encourages employees internally to use various AI models, according to former employees from both xAI and Tesla.
Some Tesla software engineers have tested Grok for coding purposes, but many prefer Anthropic's Claude, a former senior Tesla employee said. Other Tesla staff have experimented internally with customised versions of open-source models, such as Meta's Llama, rather than Grok. Meanwhile, Musk recently posted on X that Tesla's chip design team prefers Grok over Claude.
SpaceX has also been using Grok to help respond to Starlink customer support requests, according to a former xAI employee. Musk has even discussed building data centres in space in recent months, which would likely involve both SpaceX and xAI.
However, there is an obstacle to closer collaboration with SpaceX that xAI staff have discussed: As a US military contractor, SpaceX faces national security restrictions that severely limit its ability to hire non-US citizens, according to Musk.
This presents a limitation for xAI's engineering teams, which are composed mainly of Chinese nationals or non-US citizens, making it difficult for them to collaborate with SpaceX engineers on more complex matters, according to one person privy to xAI's talks on the topic.
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