During a video conference to discuss SpaceX's quarterly results on Tuesday, Musk said he was not involved in the process because of potential conflicts of interest.
Musk is a major shareholder in both companies. His stakes form the basis of his estimated $US920 billion ($A1.3 trillion) fortune, making him the world's richest person.
A merger between Tesla and SpaceX has long been the subject of speculation, but Musk has previously been evasive about the prospect.
"I think it would be a good idea, but it's really up to the special committees of both companies," Musk said in the first official confirmation that the companies were formally talking.
"Because I'm a conflicted party, I can't actually be in the discussions of the special committees," which comprised independent directors, he told investors on a conference call.
Musk noted such a move would require the approval of at least 50 per cent of Tesla shareholders.
SpaceX posted a multibillion-dollar profit last quarter after a prolonged period of losses, driven mainly by strong growth in its satellite internet business and AI data centres.
The company reported net income of $US4.4 billion ($A6.3 billion), compared with a loss of around $US1 billion ($A1.4 billion) in the third quarter of last year.
Revenue jumped to $US14.58 billion ($A20.84 billion) from around $US5.58 billion ($A7.97 billion) a year earlier, beating analysts' average forecast of about $US12.7 billion ($A18.1 billion).
Revenue from Starlink, SpaceX's satellite internet service, rose 69 per cent year-on-year to $US5.2 billion ($A7.4 billion).
As of September 30, the service had 13.6 million customers and was available on around 3,800 aircraft, among other platforms.
Revenue from AI surged to $US7.56 billion ($A10.8 billion) last quarter from $US813 million ($A1.2 billion) a year earlier.
Musk's AI company, SpaceXSI, has built large data centres, some of which are now being leased to AI competitors such as Anthropic for billions of dollars in payments.
The AI division generated an operating profit of $US431 million ($A616 million), compared with an operating loss of $US1.7 billion ($A2.4 billion) a year earlier.
Revenue from rocket launches rose six per cent year-on-year to $US1.77 billion ($A2.53 billion).
SpaceX is currently valued at more than $US1.9 trillion ($A2.7 trillion) on the stock market, while Tesla is worth around $US1.48 trillion ($A2.12 trillion).
SpaceX went public in mid-June in a record-breaking $US75 billion ($A107 billion) listing.
At an offering price of $US135 ($A193) per share, Musk's company had a valuation of nearly $US1.8 trillion ($A2.6 trillion) at its market debut.
This stood in stark contrast to its current business performance, but SpaceX justified the valuation with ambitious plans in artificial intelligence.
In the first few weeks after the IPO, the share price climbed to around $US225 ($A322), driven in part by interest from retail investors. It subsequently fell below the offering price for a time.
In an initial reaction in after-hours trading, the stock rose 1.5 per cent to around $US150 ($A214).
SpaceX has become indispensable to the US space program in recent years.
The company is investing heavily in Starship, its large rocket designed to make launching payloads into space significantly cheaper.
with Reuters
