Cursor Alliance Revives xAI’s Grok Challenge

Elon Musk founded xAI in 2023 to challenge OpenAI and Anthropic with Grok, but the lab entered 2026 amid a wave of co-founder and senior-engineer departures. Musk said the company had not been “built right the first time,” highlighting gaps in coding models and execution. SpaceX absorbed xAI in an all-stock deal in February that valued the AI business at $250 billion, while former Cursor product-engineering leaders Andrew Milich and Jason Ginsberg joined the rebuilding effort.

SpaceXAI and Cursor announced their partnership on April 21, giving SpaceX the right to buy Cursor for $60 billion or pay $10 billion for the collaboration. On July 8, they released Grok 4.5, jointly trained with Colossus compute and trillions of tokens from real developer-agent interactions. The model costs $2 per million input tokens and $6 per million output tokens and is available in Cursor, Grok Build and through the SpaceXAI API, strengthening Musk’s position against Anthropic’s Claude Code and OpenAI’s Codex.