Musk’s xAI Shake-Up: Key Departures and SpaceX Merger Rumors

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SpaceX’s xAI Unit Undergoes Restructuring Amidst Executive Departures and IPO Preparations

In a move signaling significant internal adjustments, Elon Musk, CEO of SpaceX, announced on Wednesday that its artificial intelligence venture, xAI, has undergone a reorganization that “required parting ways with some people.” The stated objective of this overhaul is to “improve speed of execution,” Musk shared via a post on X. Specific details regarding the number of affected employees or the nature of their departures, whether through layoffs or resignations, were not disclosed. Musk also indicated that the company is actively “hiring aggressively.”

This restructuring follows a series of notable exits from xAI’s founding team. Earlier this week, co-founders Jimmy Ba and Tony Wu announced their departures. This follows the earlier exits of other founding members, including Igor Babuschkin, Kyle Kosic, Christian Szegedy, and Greg Yang.

The internal shake-up occurs in the wake of a monumental, all-stock transaction finalized last week, where SpaceX, the aerospace and defense titan, acquired xAI. This acquisition integrated xAI, the owner and operator of the social media platform X and developer of the AI chatbot Grok, into the SpaceX corporate structure. The deal reportedly valued SpaceX at $1 trillion and xAI at $250 billion post-merger, according to documents reviewed. This strategic maneuver echoes Musk’s previous use of xAI to acquire X (formerly Twitter) in an all-stock deal announced in March 2025.

The exodus of co-founders and the current reorganization coincide with critical junctures for both SpaceX and xAI. SpaceX is gearing up for its anticipated initial public offering (IPO) later this year. Concurrently, xAI is facing intensifying regulatory scrutiny across Europe, Asia, and the United States.

These probes are investigating whether xAI violated regional regulations. The concern stems from reports that Grok, the company’s AI chatbot, enabled the mass creation and syndication of non-consensual explicit images, commonly referred to as deepfake pornography. These fabricated images were reportedly based on photographs of real individuals, including minors.

Launched in 2023 by Musk alongside eleven other individuals, xAI was established with the ambitious goal of competing with established AI leaders such as OpenAI and Google. At its inception, the company’s stated mission was to “understand the true nature of the universe.” The current restructuring and executive departures may represent a strategic recalibration as xAI navigates its integration into SpaceX and addresses the mounting regulatory and ethical challenges. The interplay between rapid technological development, aggressive business expansion, and the increasing demand for responsible AI governance will be a key narrative to watch as SpaceX approaches its IPO and xAI solidifies its position in the AI landscape.