New Delhi, Nov. 14 -- Just months after SpaceX was denied a swift entry into the S&P 500 Index, Elon Musk may have found a backdoor: Merging with Tesla Inc., one of the stock-market benchmark's biggest members.

Talks have been progressing toward a tie-up that would consolidate Musk's business empire into a single behemoth spanning from electric cars and AI to satellite launches and social media. A main motivation would almost certainly be unleashing potential synergies as he seeks to push into expensive and speculative ventures like robotic assistants, orbital datacenters and even colonies on Mars.

But possible inclusion in the S&P 500 offers another significant incentive to a man whose nearly $900 billion fortune has relied heavily on ...