Elon Musk has initiated a fresh wave of layoffs at his artificial intelligence company, xAI, following internal dissatisfaction with its coding assistant's performance. The move, confirmed by sources close to the firm, has resulted in the exit of additional co-founders and the installation of senior engineers from SpaceX and Tesla to conduct a sweeping audit.

The restructuring underscores the intense pressure on the two-year-old startup to compete with established players like Anthropic and OpenAI, whose AI coding tools have become industry standards. This pressure has mounted since SpaceX's $1.25 billion acquisition of xAI last year, with Musk aiming for a historic public listing by June.

Despite Musk's ambitions—which include deploying AI data centers in orbit—xAI's Grok chatbot and coding product have struggled to attract a significant user base. In a post on X, Musk framed the upheaval as necessary reconstruction. "xAI was not built right first time around, so is being rebuilt from the foundations up," he wrote, drawing a parallel to Tesla's early history.

Managers from Musk's other companies are now scrutinizing xAI's operations, leading to dismissals after reviews found work unsatisfactory. A central concern has been the training data quality, identified as a primary reason xAI's coding tool trails competitors like Claude Code and Codex.

The review has cost the company more technical leadership. Zihang Dai, a senior technical staffer who had conceded xAI's lag in coding, left this week. Another co-founder, Guodong Zhang, who led Grok's pre-training, told colleagues he was departing after being held responsible for the coding product's shortcomings and stripped of his duties. Zhang confirmed his last day was Thursday.

Source: Ars Technica