SpaceX's AI Arm Cuts About 60 Grok Imagine Staffers, Leaving a Skeleton Crew, as Coding Tools and Grok Bot Take Priority

SpaceX's artificial intelligence division has laid off roughly 60 members of the Grok Imagine team over the past week, gutting most of the staff behind the company's AI video and image generation tool, The Information reported on Friday, citing people familiar with the matter. Only a handful of employees remain to keep the product operational.

Grok Imagine is still available and functioning for users, but without a dedicated development team its future is uncertain, according to the report. The cuts suggest the tool — once positioned as xAI's answer to AI video generators — is no longer considered a strategic priority inside the merged organization.

People familiar with the matter told The Information that the company's priorities have shifted decisively toward AI coding tools and the Grok Bot assistant product line, which now rank above other product areas in resource allocation. The layoffs are a continuation of the restructuring that has been underway since xAI and SpaceX completed their merger in February, in an all-stock deal that valued xAI at about $250 billion.

That repositioning has been visible for months. In August, SpaceX paid $60 billion to acquire AI coding startup Cursor, a deal widely read as the centerpiece of the pivot toward developer tools. A trimmed-down Grok Imagine, sustained by a skeleton crew, fits the same pattern: consolidate around the products that either defend the core assistant business or generate enterprise revenue, and starve the rest.

The episode is also a data point for a question hanging over the whole sector: what happens to consumer-facing creative AI tools when the companies behind them chase agentic and coding revenue instead. Video generation is expensive to serve, hard to monetize at scale, and crowded with competitors — an awkward fit for a company now optimizing for a different story.

For users of Grok Imagine, nothing changes immediately; the product remains live. But the teardown of its team is the kind of quiet decision that tends to precede either a stale, maintenance-mode existence or a quiet sunset. Neither the company nor Elon Musk has publicly commented on the layoffs.