SpaceX lays off 60 Grok Imagine employees as Elon Musk shifts focus to AI coding and agents

Elon Musk’s SpaceX has laid off roughly 60 employees working on Grok Imagine, gutting most of the team behind its AI video and image generation tool as the company redirects resources toward AI coding and autonomous agents. The move leaves just a handful of employees maintaining the product, raising questions about its future.

The layoffs took place over the past week within SpaceX’s Super Intelligence group, according to The Information, citing people familiar with the situation. The cuts represent one of the clearest signs yet that Musk is rethinking where his AI business should invest its talent and computing resources.

“SpaceX’s artificial intelligence group has axed most of the team behind Grok Imagine, its AI tool for video and image generation, according to people familiar with the situation. Around 60 people who worked on Grok Imagine were laid off in the past week from the SpaceX Super Intelligence group, leaving only a handful of employees to keep the product alive,” The Information reported.

Grok Imagine remains available to users, but losing most of its development team casts doubt on how aggressively SpaceX plans to improve the product or compete in the crowded AI video generation market.

The decision comes just months after SpaceX acquired Musk’s xAI in February 2026 in an all-stock transaction that valued the AI company at $250 billion. The merger brought Grok and its related products under SpaceX’s growing artificial intelligence operation.

Since then, Musk has made a much bigger bet on AI software development.

In August, SpaceX completed its acquisition of Cursor, the popular AI coding assistant developed by Anysphere, in a deal based on an implied equity valuation of $60 billion. The acquisition gave SpaceX an established product in a market where developers and businesses are increasingly paying for AI tools that can write, debug, and maintain software.

The shift suggests Musk sees greater commercial potential in AI systems that perform work for users than in tools focused primarily on generating visual content.

Why Musk Is Pulling Back From AI Video Generation

The retreat from Grok Imagine comes at a difficult moment for AI video generation, an industry that has attracted billions of dollars in investment but faces questions about computing costs, customer demand, and sustainable revenue.

In March 2026, OpenAI announced it was discontinuing Sora, its AI video generation platform, after reportedly weighing the enormous computing resources required to operate the service against competing priorities. OpenAI redirected attention toward coding, enterprise software, and other AI applications.

SpaceX now appears to be following a similar path, focusing more on Cursor and autonomous agents that can complete tasks with limited human intervention.

One potential beneficiary is Grok Bot, a general-purpose AI agent product previously reported to be under development at Cursor. Such systems aim to move beyond answering questions or generating content by executing workflows, writing software, and handling multi-step assignments.

For Musk, the commercial calculation may be straightforward. AI coding assistants and agents offer businesses a clearer way to measure productivity gains and justify recurring subscription costs. AI video tools, by comparison, must compete for consumer attention and creative budgets, often at substantial computing expense.

The Grok Imagine cuts are particularly striking considering the resources SpaceX has committed to artificial intelligence. Its AI operation has invested heavily in computing infrastructure and model development, seeking to challenge OpenAI, Anthropic, and Google.

The layoffs follow earlier restructuring across SpaceX’s AI division, including engineering departures and leadership changes after the xAI merger.

Still, the decision does not necessarily mean Grok Imagine is shutting down. The product remains operational, and SpaceX has not announced plans to discontinue it.

What remains unclear is whether the remaining employees can sustain meaningful development or whether Grok Imagine will become a secondary product inside Musk’s broader AI business.

The bigger question extends beyond SpaceX. With OpenAI abandoning Sora and Musk cutting most of Grok Imagine’s team, two major AI developers have now pulled resources away from video generation.

The message emerging from Silicon Valley is hard to miss: generating impressive AI videos may attract attention, but building AI tools that customers will pay to use every day could be the more valuable business.

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