Elon Musk, chief executive officer of Tesla Inc., during the US-Saudi Investment Forum at the Kennedy Center in Washington, DC, US, on Wednesday, Nov. 19, 2025.
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Less than six weeks after Elon Musk merged SpaceX and xAI in a deal he valued at $1.25 trillion, the world’s richest person is acknowledging that his artificial intelligence startup “was not built right first time around, so is being rebuilt from the foundations up.”
Musk took to X, which is now owned by SpaceX, to make the comment after a number of xAI’s co-founders recently hit the exits. The most recent came this week, when Zihang Dai and Guodong Zhang reportedly left the company.
Last month, influential researcher Jimmy Ba announced his departure in a post on X, thanking Musk and writing that he was, “Grateful to have helped cofound at the start.” That came after Tony Wu said he was leaving. Toby Pohlen followed them out the door later in February.
A month earlier, Musk’s automaker, Tesla, said it had agreed to invest $2 billion into xAI, tied to a $20 billion funding round the company had previously announced.
The xAI exodus, which leaves Musk with only a pair of people who started the company with him in 2023, comes as SpaceX prepares to go public sometime this year in what will likely be a record IPO, should it take place.
In merging SpaceX with xAI last month, the reusable rocket company was valued at $1 trillion and the AI part of the business was tagged at $250 billion, according to documents viewed by CNBC.
Musk previously used xAI to acquire his social network X, formerly Twitter, in another all-stock transaction announced last March.
On Thursday, SpaceX said it hired two programmers from red-hot AI coding startup Cursor, Andrew Milich and Jason Ginsberg. The Financial Times reported on Friday, citing people familiar with the matter, that Musk has ordered a round of job cuts after seeing the rapid success of coding tools from generative AI rivals OpenAI and Anthropic.
“Many talented people over the past few years were declined an offer or even an interview @xAI,” Musk wrote on X early Friday. “My apologies.”
Musk added that he and Baris Akis, who is responsible for engineering talent at xAI, “are going through the company interview history and reaching back out to promising candidates.”
In addition to losing early talent and falling behind in AI-powered coding, xAI faces a number of controversies surrounding its chatbot and image generator Grok, which is the subject of government investigations in multiple international jurisdictions.
The problems began after Grok enabled users to easily generate non-consensual sexual images, or deepfake porn, by modifying photos or videos of real adults and children.
Under the Trump presidency, xAI’s Grok has won government contracts from the Defense Department and General Services Administration.
Meanwhile, xAI has been spending billions of dollars to stand up power and data infrastructure in and around Memphis, Tennessee, in recent years. The company just scored a permit in the state of Mississippi to set up one of the largest power plants in the region to use natural gas-burning turbines for xAI’s data centers.
Tesla, which accounts for substantially all of Musk’s liquid wealth, is working with xAI in a number of ways. The EV maker is integrating Grok into its vehicle infotainment and navigation systems and using Grok models in conjunction with the development of Optimus humanoid robots.
Tesla has also sold hundreds of millions of dollars worth of its big backup batteries to xAI for use at its data centers.
Musk and xAI didn’t immediately respond to requests for comment.
