Elon Musk dissolved xAI as a standalone company in May 2026, merging it into SpaceX under the working name SpaceXAI. The move gave the struggling startup resources while offering SpaceX another pitch to Wall Street investors. In July, Grok 4.5 launched with aggressive pricing aimed at undercutting competitors.

Grok 4.5 costs $2 per million input tokens and $6 per million output tokens—significantly below Claude Opus 4.8 ($5/$25 input/output) and GPT-4 Turbo pricing. The model includes a 500,000-token context window and focuses on reasoning and coding tasks.

The Strategy

Michael Nicolls, placed in charge of xAI this spring, set a target to match Anthropic’s Claude in capability. Merging xAI with SpaceX provided both capital and cover—Musk can now claim SpaceX is a diversified company with AI and satellite infrastructure as revenue streams.

The aggressive pricing suggests Musk wants market share over profitability. Grok isn’t yet competitive with Claude Opus on complex reasoning, but the low pricing attracts developers and enterprises exploring alternatives.

The AI Device Rumor

Reports emerged in July that SpaceX is building a smartphone-like device to facilitate human-AI communication. The device allegedly features a design slimmer than an iPhone. Musk posted that the news was “utterly false,” though the original reports cited investor showings and prototype displays.

Whether the device exists or not, the pattern is clear: Musk is positioning AI infrastructure—compute, models, and potentially hardware—as core SpaceX business.

Grok 4.5 is available through xAI’s website and via API. SpaceX IPO happened in June 2026.