Elon Musk has ordered another round of job cuts at xAI, the AI startup he launched in July 2023, after its coding product failed to close the gap on Anthropic's Claude Code and OpenAI's Codex. According to the Financial Times, managers from SpaceX and Tesla have been seconded to audit xAI employees' work, with some dismissed after being judged inadequate. Musk acknowledged the overhaul on X, posting that "xAI was not built right first time around, so is being rebuilt from the foundations up," drawing a parallel to early struggles at Tesla.
Two more <a href="/news/2026-03-14-elon-musk-pushes-out-more-xai-founders-as-ai-coding-effort-falters">cofounders departed</a> this week. Zihang Dai — co-author of Transformer-XL and XLNet and one of xAI's most senior technical figures — left Monday, while Guodong Zhang, who ran pre-training of Grok models and led the coding product, confirmed his exit after reportedly being blamed by Musk for the product's underperformance. They follow Greg Yang (creator of Maximal Update Parametrization), Jimmy Ba (co-inventor of the Adam optimizer and Layer Normalization), and Tony Wu (co-creator of AlphaGeometry and STaR). Of the original 11 cofounders who helped build xAI from scratch, only Manuel Kroiss and Ross Nordeen remain — a near-total wipeout of the team's foundational research leadership across theoretical scaling, optimization, architecture, reasoning, and pre-training.
The "Macrohard" project — Musk's self-described most important initiative, aimed at building digital agents capable of replicating entire software companies — has itself become a symbol of the instability. Former DeepMind researcher Toby Pohlen was appointed to lead it, then departed 16 days later. Tesla's head of AI software, Ashok Elluswamy, has since been redeployed to reboot it. To shore up the Grok Code Fast coding product, xAI poached two engineers from AI coding startup Cursor — Andrew Milich and Jason Ginsberg — signaling a shift from foundational model research toward rapid product iteration.
World-class ML researchers are being swapped out for operational executors drawn from Tesla and SpaceX, alongside product-focused hires from competitors. Staff morale is suffering, with researchers quitting due to burnout from Musk's "extremely hardcore" work demands and competing offers from rival AI labs. A company-wide memo was sent denying imminent mass layoffs, though targeted firings continue.
xAI is pressing ahead with its Memphis data center expansion toward one million GPUs — and it retains data advantages through X's social graph. Whether Milich, Ginsberg, and the incoming Tesla and SpaceX operators can build a competitive coding product without the research bench that created Grok will become clear when Grok Code Fast ships.