Musk acknowledges serving costs outran revenue
Elon Musk, who leads SpaceXAI (formerly xAI), the AI company under SpaceX, posted on X on Nov. 1 (Nov. 2 Japan time) that the cost of serving the company's AI agent "Grok Bot" was unsustainably high relative to revenue. Grok Bot is a service that carries out tasks such as research, document writing and operating websites on users' behalf on its own virtual computer. He was replying to a user who asked for an allowance reset, saying many users had quickly used up their weekly allowance.
The cost of serving Grok Bot was unsustainably high relative to revenue.
Musk did not give figures for costs or revenue, and did not say whether the limits had been lowered or whether a reset would be granted. According to Forbes, in a separate exchange Musk asked a user whether the price of switching to a plan with higher limits was too high. According to TeslaNorth, he replied "Just being sensible" to a post quoting his remark. TechCrunch reported that Musk acknowledged the surge in usage was not a bug. According to Gizmodo, SpaceXAI did not respond to a request for comment.
Usage meters jump midweek
Discontent spread because usage meters suddenly jumped in the middle of the week. According to British outlet TechRadar, reports poured in on X of jumps from 50% to 100%, from 35% to 78% and from 70% to 100%, and some users said their meters reached 100% while they were not using the AI agent. Gizmodo reported cases of going from 68% to 98% overnight and from 58% to 100% in less than an hour. Explainer site Data Studios also reported a case of going from 55% to 100% in about three hours. All of these come from user posts, and SpaceXAI has not confirmed the figures. Some users hit 100% with four days left before the reset. On Reddit, one post called it an "indirect rug pull."
A user subscribed to the $300-a-month "SuperGrok Heavy" plan posted that their meter went from 50% to 100% overnight after a restart, halting their work, and that they would step away from Grok Bot and not renew. Support replied that the allowance had been used up, and it took three to four days for a staff member to respond, the user said. Another user pointed out that because neither request counts nor credit counts are disclosed, a jump from 50% to 100% overnight cannot be verified.
On the other hand, some reports suggest a metering bug. According to Data Studios, in one case the Grok Bot screen showed 24% while the settings screen showed 48%, and after a restart both showed about 76%. According to Forbes, AI coding tool "Cursor" reported a bug in billing and usage displays on Nov. 1 and later said it had been resolved, but its relationship to the surge is unknown. TechRadar reported that Musk deliberately cut the allowance, while Data Studios said that as of Nov. 2 the wording of the pages explaining pricing and limits had not changed from the October version, so it could not confirm whether the allowance had been reduced.
Allowance shared across 3 plans, amounts undisclosed
Grok Bot is available on the $30-a-month "Premium," $100 "Super" and $200 "Ultra" tiers of "The X Subscription," a flat-rate service SpaceXAI launched on Oct. 12. It is not included in the $8-a-month "Plus" tier. Grok Bot usage is deducted from a weekly allowance shared with the chat AI "Grok" and with Cursor. Usage beyond the allowance is purchased as additional usage at list API prices (the API being the mechanism for calling the service from outside software).
Each plan's allowance is expressed only as a multiple of Plus, and the amount in tokens (the units of text the AI processes) or number of tasks is not disclosed. Higher tiers get more usage per dollar: Ultra costs 6.7 times as much as Premium and provides 12.5 times the usage.
For businesses, Premium, Super and Ultra are offered per seat at the same prices, with a weekly allowance for each seat. Existing SuperGrok and Cursor subscriptions continue unchanged unless users switch.
Earnings call touted "fastest growth"
The remark came less than two weeks after an earnings call that emphasized growth. At SpaceX's July-September earnings call on Oct. 20, President Gwynne Shotwell said Grok Bot's paid weekly users had reached 800,000 in early October, more than double the previous month. Musk said he had never seen anything grow this fast, and also said that the more useful Grok Bot became, the more users used it each week. He also suggested that within a few weeks it would be rolled out widely to businesses, and that Grok Bot could end up using most of the company's AI computing resources.
SpaceX's July-September revenue was $14.58 billion, of which the AI division accounted for $7.56 billion, up sharply from $813 million a year earlier. The AI division's capital spending was $16.44 billion, more than 80% of the total $19.59 billion. According to TechCrunch, the AI division's operating profit was $431 million and would have been higher without a $1.2 billion one-time charge related to the acquisition of Cursor.
According to a Reuters report cited by cryptocurrency exchange KuCoin, much of the AI division's revenue comes from leasing data center computing capacity. According to SpaceX's IPO prospectus, Anthropic pays SpaceX $1.25 billion a month for computing capacity through May 2029. That is a different revenue source from individual flat-rate services such as Grok Bot.
About an hour and a half before his remark on costs, Musk replied "Interesting" to a post by Kyle Reidhead of investment media outlet Milk Road arguing that computing capacity should be leased out rather than devoted to Grok.
Interesting
Under flat-rate pricing, computing costs grow as users use more. According to TechRadar, tech stocks fell sharply the previous week on concerns about AI profitability, and the handling of Grok Bot's allowance is a gauge of the quality of the AI division's revenue.
A free reset in September
On Sept. 1 (Sept. 2 Japan time), Musk posted that all Grok Bot users would get another free usage reset. Until now, the company had responded to complaints about limits with resets. This time he cited costs and did not mention a reset.
We're giving all @Grok @Bot users another free reset on token usage
- Trial of Grok Bot beginsReport
- Musk posts that another free usage reset will be given to all usersOfficial
- Flat-rate plan combining Grok, Grok Bot, Cursor and X Premium launchedOfficial
- Earnings call says paid weekly users reached 800,000Official
- Discontent spreads over jumps in usage metersReport
- Musk posts that serving costs were unsustainable relative to revenueOfficial
OpenAI and Anthropic expand limits the same week
Competitors expanded the limits on their paid plans that same week. OpenAI on Oct. 29 doubled the limits for all tiers of "Pro," the top plan of "ChatGPT," and for its business "Business Premium" plan. On Oct. 31, it indicated on a help page that from December, limits for ChatGPT and its AI coding tool "Codex" would become a shared allowance counted in tokens.
Anthropic on Oct. 30 renamed its higher-tier "Claude" plan "Max 20x" to "Ultra" and removed the five-hour limits for users who have completed identity verification. The weekly limits remain.
According to TechRadar, users of ChatGPT and Anthropic's "Claude Code" can also use many times their monthly fee in computing. Because AI agents repeat reasoning and searches for a single request, their computing costs are higher than for chat. The profitability of flat-rate plans is a challenge common to all of the companies, and responses diverged between the two companies expanding limits and SpaceXAI, which moved to tighten them.
