Elon Musk has further ousted his xAI co-founder and employees as the startup reorganizes after being acquired by his aerospace company SpaceX ahead of a potential initial public offering.
xAI has been undergoing internal restructuring since mid-February following the merger.
Musk confirmed at an all-hands meeting last month that several employees had left the company following the departure of co-founders Tony Wu and Jimmy Ba, reducing the original founding team from 12 to six.
As dissatisfaction with xAI’s coding department grows, the founding team is now down to two members, according to the Financial Times.
xAI’s Imagine team leader Guodong Zhang told colleagues he was leaving after Musk blamed him for coding issues and removed key responsibilities. Jang announced his departure on Thursday.
Co-founder Zihang Dai also left earlier this week.
The billionaire entrepreneur brought in executives from SpaceX and Tesla to audit xAI’s operations, resulting in the firing of several employees whose performance was deemed insufficient, the report said.
Musk said in a statement Thursday that xAI has lost out on strong talent in the past and that recruiters are now attempting to re-engage them in the hiring process.
New employees from code generation startup Cursor have joined the company, including Andrew Milich and Jason Ginsberg.
Over the years, many talented people have been turned down for offers or even interviews. @xAI. I apologize.@BarisAkis We also review the company’s interview history and contact promising candidates again. https://t.co/tvhipa1lu1
— Elon Musk (@elonmusk) March 13, 2026
Tesla-style rebuild
Musk said xAI needs a rebuild similar to what happened at Tesla.
In 2018, a few years after Tesla went public, he announced a major reorganization to improve communication and reduce bureaucracy.
At the time, the company was facing financial pressures, including billions of dollars in cash outflows, a credit rating downgrade by Moody’s and analysts’ concerns that it may need additional capital.
The xAI founder stated that xAI was not properly structured in its initial stages and needed to be rebuilt from the ground up.
xAI employees have expressed concerns that the disruption is lowering morale and preventing the company from operating at its full capacity.
Researchers continue to leave, fed up with Musk’s demands for an “extremely hardcore” work culture, while others have accepted superior compensation packages from rival companies.