SpaceX reportedly cuts most of its AI video team to bet on coding tools instead

Elon Musk's SpaceX has reportedly cut about 60 people from the team behind Grok Imagine, its AI image and video generator. Only a handful of staff remain to keep the product running, according to The Information, which first reported the cuts on November 13.

SpaceX has not confirmed the layoffs, their size, or the product's future. But the reported move is a sharp reversal. In March, Musk posted that the next version of Grok Imagine would be "epic" and that the company was doubling down on the category.

For investors, the signal is about where SpaceX now wants its AI money to go. For businesses, the message is blunter: AI video is proving so expensive that a second deep-pocketed US player appears to be stepping back from it.

What was reportedly cut, and why

The cuts happened over the week before the report, The Information said. Startup Fortune, relaying that report, described the 60 as more than half the team.

Management reportedly wants to focus on two things instead: AI coding tools and Grok Bot, an AI agent, meaning software that carries out tasks on a user's behalf rather than just answering questions.

The Information cited two pressures. First, cost: generating video takes far more computing power than generating text. Second, quality: independent comparison tests reportedly showed Grok Imagine trailing the leading video models.

Coding tools are where SpaceX has already spent heavily. It bought the AI coding startup Cursor for about $60 billion, a deal that closed in August. That follows its all-stock purchase of Musk's xAI in February, which Investing.com valued at $250 billion.

SpaceX's AI unit is growing fast. It had third-quarter revenue of about $7.6 billion, up roughly 830% from a year earlier, according to 24/7 Wall St. and Pulse 2.0. The drivers cited were new cloud computing deals, the Cursor purchase and wider use of Grok. Video was not named as a driver.

What it means for customers

Grok Imagine still works. On November 14, xAI's public status page listed Imagine as operational. Its pricing page still includes Imagine in the $8 Plus plan, and five Imagine models remain available to developers who build it into their own software, according to a review by the tech site RoboRhythms.

But the user-facing picture is shakier. Around November 12 and 13, the Imagine tab disappeared from the web and apps for many accounts, including paid ones, RoboRhythms reported. Some saved creations showed warning symbols. xAI posted no notice explaining the change.

For a marketing team or agency that has built workflows around Grok Imagine, that is the practical risk. A product run by a skeleton crew can keep working for months. It is less likely to get quality upgrades, new features or quick fixes. Buyers should keep copies of anything they can't easily recreate and line up a backup tool.

The layoffs also land on a team that was already thin. TechCrunch reported in May that more than 50 researchers and engineers had left SpaceX's AI group since the merger. At least 11 went to Meta and at least seven to Mira Murati's Thinking Machines Lab.

The AI video field is narrowing

SpaceX would not be the first to pull back. OpenAI said in March it would shut down its Sora video app and the related developer service. Axios reported that Sora was consuming significant computing power. A planned $1 billion Disney investment tied to Sora was also called off.

If the SpaceX report holds, Google and Meta become the main US contenders in AI video, Investing.com said. It named China's ByteDance, Kuaishou and MiniMax as leaders in the field, and said ByteDance's Seedance model is widely seen as the industry benchmark.

That shift matters for anyone pricing the AI video market. The big labs that can afford video are increasingly those with their own ad or social platforms to feed, such as Google's YouTube and Meta's apps. Labs selling mainly to businesses are choosing products that customers pay for by the seat or by usage, such as coding assistants.

There are two readings of SpaceX's move, and the evidence supports both. One is discipline: cutting a costly, trailing product so it can fund faster-growing ones. The other is retreat: leaving a race it was losing, after its leader publicly promised to win it.

Either way, the open questions are concrete. Will SpaceX confirm the cuts? Will Grok Imagine get any further updates? And will the coding and agent products justify the reallocation? Customers and shareholders should get early answers in the company's next quarterly report.