Should Elon Musk merge Tesla and SpaceX?

Tesla’s stock is a market darling this season and there is a lot of investor and customer excitement about the business’s new Model 3 electric power car.

But one prominent Wall Road analyst thinks that Tesla (TSLA) and its own increasingly stretched-for-period CEO Elon Musk should consider merging the company along with his various other big venture — rocket organization SpaceX.

Morgan Stanley’s Adam Jonas said in a written report Tuesday that Tesla’s major obstacle is fierce competition not simply from traditional auto manufacturers, but tech companies looking to step up their initiatives in the driverless car industry. Believe Uber, Apple (AAPL, Tech30) and Google (GOOGL, Tech30).

“Tesla’s addressable industry of sustainable transportation will attract fierce competition from a few of the world’s best capitalized tech firms with arguably superior access to capital, talent and business models that can monetize vehicle info and content possibilities,” Jonas wrote.

Jonas added that is “threatening the long-term independence of Tesla as a stand-alone entity.”

Tesla is currently valued at about $50 billion, rendering it worth a lot more than established vehicle giants Ford (F), Fiat Chrysler (FCAU) and Nissan (NSANY) and getting it within striking range of surpassing GM (GM) and Honda (HMC).

But despite the fact that Tesla’s stock continues to be up 40% in 2017, it has plunged a lot more than 20% since it hit an all-period high close to $390 a share found in mid-September.

Concerns about production delays for the Style 3, which is intended to be Tesla’s affordable, mass industry car, are actually weighing on the company.

The actual fact that Tesla has added just one more new product to the blend — a Semi truck — also offers investors nervous about Tesla biting off a lot more than it can chew.

And there are lingering issues about whether Tesla’s acquisition of SolarCity, a renewable strength company, co-founded by two of his cousins, of which Musk was chairman, will serve up to now another distraction for the even now unprofitable Tesla.

Related: Tesla’s truck won’t be out until 2019…but there already are orders for it

That’s where SpaceX will come in. SpaceX, which includes backing from Musk together with venture capital organization Draper Fisher Jurvetson, mutual fund giant Fidelity and Google owner Alphabet, is definitely valued at $21.5 billion, according to analyze firm CB Insights.

That makes SpaceX the sixth-most valuable unicorn startup on the planet, albeit a company that isn’t as large as Tesla.

But Jonas thinks SpaceX has a brighter future than Tesla. He argues SpaceX could possibly be worth as much as $121 billion if everything will go correct for the company. The space travel business could possibly be worth as much as $1.75 trillion by 2040, Jonas wrote.

Even though SpaceX must cope with the Jeff Bezos-backed Blue Origin and United Launch Alliance — a jv of Lockheed Martin (LMT) and Boeing (BA) — there is much less competition than there is in the automotive universe.

“Our preliminary modeling of SpaceX reveals a start business that may be in an extremely dominant placement, positioning the company to enter highly profitable markets, such as for example proprietary satellite broadband,” Jonas wrote.

Related: Musk trolls Tesla haters in Twitter

Jonas noted that Tesla and SpaceX already share knowledge about manufacturing — particularly the utilization of metal casting –and that SpaceX workers have generally been used to beta test Tesla cars. So a further alliance wouldn’t be out of the question.

A merger of Tesla and SpaceX could also reassure Wall Road that Musk will stay as focused on his electrical car business as he’s using one day setting foot on Mars.

“Investors widely expect Elon Musk to, over time, devote increasing levels of his period and talents to SpaceX, raising the real concern of who could replace him in Tesla. A mixture of efforts between the two firms could address this essential issue,” Jonas wrote.

Jonas added that there appears to be a shift found in how Musk has addressed the SpaceX-Tesla speculation previously year.

Related: Tesla board member leaves organization amidst misconduct allegations

During a conference call in August 2016, Musk stated, “I don’t believe there’s a solid product rationale to combine SpaceX and Tesla” and added that as the companies cooperate, “it’s not enough that could justify merging them in one entity.”

Fast ahead to August of this calendar year though and Musk said the “cross-fertilization of know-how from the rocket and spacecraft history to auto…has got really been quite valuable” and it’s really helped him think that about how Tesla can better produce mass-market vehicles.

Tesla and SpaceX weren’t immediately available for comment about the Morgan Stanley article.

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