Wallace kills her because she cannot breed.
Wallace is trying to create replicants that can have children. Wallace's words reveal his intent to create a civilization that spans the stars - but he needs replicants that can breed to do that:
"...Now let's have a look at you...we make angels in the service of civilization...yes there were bad angels once...now I make good angels. That is how I took us to nine new worlds. Nine. A child can count to nine on fingers. We should own the stars. Every leap of civilization was built off the back of a disposable workforce. We lost our stomach for slaves unless engineered. But I can only make so many. "
Wallace refers to the woman's inability to have children - she is "barren"...
"That barren pasture, empty and salted...right here. The dead space between the stars."
This reveals that Wallace has been trying to create new models of replicants that can breed - but this woman replicant is another failed experiment. A tear falls from Luv's eyes suggesting that she knows or been witness multiple times before to the horror about to unfold.
Wallace quotes Satan in a line from Milton's Paradise Lost
Wallace reveals that as the creator of this new civilization he is metaphorically like Satan who felt compelled to replace God in his seat in heaven.
"And this the seat we must change for heaven "
Wallace's quote above is from when Lucifer was cast from heaven and into hell as a Fallen Arch-Angel.
Wallace then implies he is in his own living hell in that he cannot replicate Tyrell's accomplishment of creating breeding replicants.
"I cannot breed them. So help me. I have tried. We need more Replicants than can ever be assembled. Millions so we can be Trillions more. We could storm Eden and retake her. Tyrell's final trick: Procreation. Perfected then lost."
Wallace then tells Luv the work she has to do.
"But there is a child. Bring it to me."
As he leaves, he asserts the importance of of her replicant role as an "angel built to serve civilization." He implies she is like the angels serving God - but in this case God is him.
"The best of angel of all. Aren't you, Luv?"