SpaceX's artificial intelligence group has gutted the team behind Grok Imagine, laying off roughly 60 people who built the AI video and image generation tool, as Elon Musk redirects the unit toward coding tools and autonomous agents. The cuts, reported by The Information on Friday, leave only a handful of employees to keep the product running.
Grok Imagine is the image and video generation feature inside Grok, the chatbot originally built by xAI. Users ask it for pictures or short video clips, and it has been one of the most visible creative features of the Grok app. The layoffs, which took place over the past week, hit the video side of the operation hardest, according to people familiar with the situation cited by The Information.
The product itself remains available to users, and SpaceX has not announced any plan to shut it down. But with most of its development team gone, questions now hang over how aggressively the company plans to improve it — or whether it can keep pace in a video generation market where rivals are moving fast.
A pivot to coding and agents
According to The Information, management now wants to put its weight behind AI coding tools and Grok Bot, the autonomous agent built on the Grok chatbot. In a post on X summarising the report, the publication said the cuts "signal a shift toward AI coding tools and agents as Chinese companies pull ahead in video generation."
The move fits a reorganisation that has been running since SpaceX absorbed xAI in February 2026, in an all-stock deal that valued the AI company at $250 billion. The combined AI operation was split into four focus areas — Grok Main and Voice, Coding, Imagine, and Macrohard — and the coding side has been gathering momentum since SpaceX acquired Cursor, the popular AI coding assistant, in August.
The company's own newsroom tells the same story. Grok Imagine has not featured in an x.ai news post since early August, while a dozen of the 25 posts published since then have been about Grok Bot, according to a count by FourWeekMBA.
Video AI's expensive squeeze
The report also cited independent benchmarks showing Grok Imagine trailing the leading video models, and noted that video generation demands far more computing power than text. That cost equation has been thinning out the field all year: OpenAI discontinued Sora, its own AI video generation platform, in March, after reportedly weighing the enormous compute required against competing priorities.
Chinese companies, meanwhile, have been pulling ahead in video generation, and the pressure is visible across the category. For Musk's AI group, the calculation appears to be that coding tools and agents — where the Grok Bot and Cursor bets sit — offer a better return on scarce compute and talent than chasing the video frontier.
A team already thinning
The cuts are not the first thinning of the AI operation since the merger. TechCrunch reported in May that more than 50 researchers and engineers had already left, including Haotian Liu and Guodong Zhang, both tied to Imagine's leadership. In September 2025, xAI let go of roughly 500 data annotators on the Grok team, saying it would hire specialist tutors instead.
Around the same time as this week's cuts, many users reported that the Imagine tab had disappeared from Grok's sidebar, with grok.com/imagine now opening the normal chat in image and video mode. Neither SpaceX nor Musk has commented publicly on the layoffs, and no updated roadmap or timeline for the video features has been announced.
