Elon Musk rarely apologizes, which is why his latest statement drew attention.
In a post on X, Musk admitted that his AI company xAI “was not built right the first time” and is now being rebuilt from the ground up. He also apologized to job candidates the company previously rejected and said he and xAI talent head Baris Akis are reviewing past interview records to reconnect with people who may have been overlooked.
The admission is notable for a company launched in 2023 with ambitions of solving the universe’s biggest mysteries. The timing makes it even more striking.
Just six weeks ago, SpaceX acquired xAI in a deal valuing the combined company at about $1.25 trillion. Earlier, Tesla had also disclosed a $2 billion investment in xAI during its Series E funding round. Now Musk is acknowledging that the company he promoted to investors is being rebuilt.
The situation has also fueled existing legal pressure. Tesla shareholders are already suing Musk for alleged breach of fiduciary duty, claiming he redirected AI talent and resources away from Tesla toward his private ventures. His admission adds another dimension to those concerns.
The company is also dealing with a wave of departures. Of the 12 original cofounders who started xAI with Musk in 2023, only two remain. Several key figures have left since early 2026, including prominent AI researcher Jimmy Ba, Tony Wu, Toby Pohlen, Guodong Zhang, and Zihang Dai.
Sources say the exits reflect a mix of burnout, Musk’s demanding management style, and an internal structure that struggled to support the rapid pace of AI development the company promised.
One immediate issue is Grok’s performance in coding tasks. Musk recently acknowledged that “Grok is currently behind in coding,” an important area as AI-assisted programming becomes one of the most commercially valuable applications of large language models.
Competitors such as Anthropic’s Claude Code and OpenAI’s Codex are currently ahead. To catch up, xAI has recruited two engineers from AI coding startup Cursor, Andrew Milich and Jason Ginsberg, who will report directly to Musk.
Beyond performance challenges, Grok has also faced reputational problems after its image generator produced non-consensual intimate imagery, drawing scrutiny from regulators in several countries and complicating efforts to attract enterprise customers.
Musk is now attempting another reset. He has sent executives from Tesla and SpaceX to review xAI’s operations and identify underperforming teams. At the same time, the company is reaching out again to previously rejected candidates in an effort to rebuild its talent pipeline.
Musk has successfully rebuilt companies before, guiding Tesla through near-bankruptcy during the Model 3 launch and pushing SpaceX through multiple early rocket failures before its breakthrough. The question now is whether the same turnaround strategy can work in the fast-moving AI industry, where falling behind even briefly can have lasting consequences.
With billions already invested and SpaceX reportedly preparing for a potential IPO, the outcome of xAI’s rebuild could carry significant implications for Musk’s broader business empire.