(Reuters) -Shares of Apple Inc jumped nearly 5% on Tuesday, a day after Reuters exclusively reported that the iPhone maker is aiming to produce a passenger vehicle by 2024 with its own battery technology.
Central to the company’s strategy is a new battery design that could “radically” reduce the cost of batteries and increase the vehicle’s range, according to the report.
“If Apple has achieved a battery breakthrough, this could serve as a driver to finally move forward with production given battery costs are one of the main obstacles to mass adoption of EVs,” Evercore analyst Amit Daryanani wrote.
Apple’s shares were last up 3.9% at $133.27, on track to add nearly $86 billion to its market valuation.
Shares of electric-car maker Tesla Inc fell another 3% on Tuesday. Tesla shares, which debuted on the benchmark S&P 500 index on Monday, saw losses accelerate toward the end of the session after news of potential future competition from Apple.
“From a Tesla perspective, we have long felt that tech players like Apple (working with manufacturing partners such as Foxconn) represent far more formidable competition than the established/legacy OEMs,” Morgan Stanley analysts said in a note.
Apple has decided to tap outside partners for elements of the system, including lidar sensors, which help self-driving cars get a three-dimensional view of the road, Reuters reported.
Shares of Velodyne Lidar, a supplier of lidar systems for Apple’s fleet of self-driving test vehicles, jumped 14% on Tuesday, while peer Luminar Technologies rose 8%.
It remains unclear who would assemble an Apple-branded car, but sources have said they expect the company to rely on a manufacturing partner to build vehicles.
“Initially, the most likely rollout would involve several hundred Apple Cars driving in US cities for a year or two before becoming more widely available,” wrote Gene Munster, managing partner at Loup Ventures.
Reporting by Munsif Vengattil in Bengaluru; Editing by Sriraj Kalluvila