Tesla CEO Elon Musk attends the US-Saudi Investment Forum held at the Kennedy Center in Washington, DC, USA on Wednesday, November 19, 2025.
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Less than six weeks after Elon Musk merged SpaceX and xAI in a deal valued at $1.25 trillion, the world’s richest man admits his artificial intelligence startup is “being rebuilt from the ground up because it wasn’t built right from the beginning.”
Musk made the comments criticizing X, which is now owned by SpaceX, following the recent departure of some of xAI’s co-founders. The most recent incident occurred this week when it was reported that Zihang Dai and Guodong Zhang had left the company.
Last month, influential researcher Jimmy Barr announced his resignation in a post about X, thanking Musk and writing, “Thank you for helping me co-found the company.” That was after Tony Woo announced he was retiring. Toby Pollen followed them out in late February.
A month ago, Musk’s automaker Tesla announced it had agreed to invest $2 billion in xAI in connection with the company’s previously announced $20 billion funding round.
The xAI leak will leave Musk with just the two people he co-founded the company with in 2023, but if it goes ahead, it would likely be a record IPO as SpaceX prepares to go public later this year.
Last month’s SpaceX and xAI merger valued the reusable rocket company at $1 trillion and the AI portion of the business at $250 billion, according to documents seen by CNBC.
Musk previously used xAI to acquire his social network X (formerly Twitter) in a separate all-stock deal announced last March.
On Thursday, SpaceX announced it has hired two programmers from AI coding startup Cursor, Andrew Milich and Jason Ginsberg. The Financial Times reported on Friday that Musk had ordered a series of job cuts after seeing the rapid success of coding tools from generative AI rivals OpenAI and Anthropic, citing people familiar with the matter.
“Over the past few years, many talented people have been turned down by @xAI for offers or even interviews,” Musk wrote to X early Friday morning. “very sorry.”
Musk added that he and Baris Akis, head of engineering talent at xAI, are “reviewing internal interview history and reaching out to potential candidates.”
In addition to losing early talent and falling behind in AI-powered coding, xAI is facing a number of controversies surrounding its chatbot and image generator Grok. Grok is the subject of government investigations in multiple international jurisdictions.
The issue began after Grok made it easy for users to generate non-consensual sexual images and deepfake pornography by altering photos and videos of real adults and children.
Under President Trump, xAI’s Grok won government contracts from the Department of Defense and the General Services Administration.
Meanwhile, xAI has spent billions of dollars in recent years building power and data infrastructure in and around Memphis, Tennessee. The company just received a permit in Mississippi to install one of the region’s largest power plants using natural gas-fired turbines at xAI’s data center.
teslaaccounts for virtually all of Musk’s liquid assets and works with xAI in a variety of ways. EV manufacturers are integrating Grok into vehicle infotainment and navigation systems and using Grok models in conjunction with the development of the Optimus humanoid robot.
Tesla also sold hundreds of millions of dollars worth of large backup batteries to xAI for use in its data centers.
Musk and xAI did not respond to requests for comment.
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