Elon Musk: Big dreamer or monorail salesman?

Tesla’s inventory has been a market darling this 12 months and there’s a lot of investor and client pleasure in regards to the firm’s new Mannequin three electrical automobile.

However one outstanding Wall Avenue analyst thinks that Tesla (TSLA) and its more and more stretched-for-time CEO Elon Musk ought to contemplate merging the corporate along with his different large enterprise — rocket firm SpaceX.

Morgan Stanley’s Adam Jonas stated in a report Tuesday that Tesla’s largest problem is fierce competitors not simply from conventional auto makers, however tech firms seeking to step up their efforts within the driverless automobile market. Suppose Uber, Apple (AAPL) and Google (GOOGL).

“Tesla’s addressable market of sustainable transport will entice fierce competitors from a number of the world’s finest capitalized tech companies with arguably superior entry to capital, expertise and enterprise fashions that may monetize automobile information and content material alternatives,” Jonas wrote.

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

Tesla is presently valued at about $50 billion, making it value greater than established auto giants Ford (F), Fiat Chrysler (FCAU) and Nissan (NSANY) and placing it inside hanging distance of surpassing GM (GM) and Honda (HMC).

However although Tesla’s inventory remains to be up 40% in 2017, it has plunged greater than 20% because it hit an all-time excessive close to $390 a share in mid-September.

Issues about manufacturing delays for the Mannequin three, which is supposed to be Tesla’s inexpensive, mass market automobile, are weighing on the corporate.

The truth that Tesla has added one more new product to the combo — a Semi truck — additionally has traders nervous about Tesla biting off greater than it will possibly chew.

And there are lingering questions on whether or not Tesla’s acquisition of SolarCity, a renewable vitality firm, co-founded by two of his cousins, of which Musk was chairman, will function one more distraction for the nonetheless unprofitable Tesla.

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

That is the place SpaceX is available in. SpaceX, which has backing from Musk in addition to enterprise capital agency Draper Fisher Jurvetson, mutual fund big Constancy and Google proprietor Alphabet, is valued at $21.5 billion, according to research firm CB Insights.

That makes SpaceX the sixth-most useful unicorn startup on the planet, albeit an organization that is not as large as Tesla.

However Jonas thinks SpaceX has a brighter future than Tesla. He argues SpaceX may very well be value as a lot as $121 billion if all the things goes proper for the corporate. The house journey enterprise may very well be value as a lot as $1.75 trillion by 2040, Jonas wrote.

And whereas SpaceX should deal with the Jeff Bezos-backed Blue Origin and United Launch Alliance — a three way partnership of Lockheed Martin (LMT) and Boeing (BA) — there may be far much less competitors than there may be within the automotive world.

“Our preliminary modeling of SpaceX reveals a launch enterprise that may very well be in a extremely dominant place, positioning the corporate to enter extremely worthwhile markets, corresponding to proprietary satellite tv for pc broadband,” Jonas wrote.

Related: Musk trolls Tesla haters on Twitter

Jonas famous that Tesla and SpaceX already share data about manufacturing — notably the usage of aluminum casting –and that SpaceX workers have usually been used to beta check Tesla automobiles. So an extra alliance would not be out of the query.

A merger of Tesla and SpaceX might additionally reassure Wall Avenue that Musk will stay as centered on his electrical automobile enterprise as he’s on sooner or later setting foot on Mars.

“Buyers extensively count on Elon Musk to, over time, commit rising quantities of his time and abilities to SpaceX, elevating the very actual query of who might exchange him at Tesla. A mixture of efforts between the 2 companies might handle this essential challenge,” Jonas wrote.

Jonas added that there appears to be a shift in how Musk has addressed the SpaceX-Tesla hypothesis prior to now 12 months.

Related: Tesla board member leaves firm amidst misconduct allegations

Throughout a convention name in August 2016, Musk stated, “I do not suppose there is a sturdy product rationale to mix SpaceX and Tesla” and added that whereas the businesses cooperate, “it isn’t sufficient that may justify merging them into one entity.”

Quick ahead to August of this 12 months although and Musk stated the “cross-fertilization of data from the rocket and spacecraft historical past to auto…has actually been fairly useful” and it is helped him take into consideration how Tesla can higher make mass-market automobiles.

Tesla and SpaceX weren’t instantly obtainable for remark in regards to the Morgan Stanley report.

CNNMoney (New York) First revealed December 6, 2017: 10:14 AM ET