Shares in Apple Inc jumped more than 3% on Tuesday, adding more than General Motors' entire market capitalisation to the value of the iPhone maker, after its plans to focus on electric car production were revealed.
Apple, whose automotive efforts had been ‘uneven’ since 2014, is now targeting 2024 to produce a passenger vehicle that would include its own breakthrough battery technology.
The news hit shares of Tesla Inc and sent those in a number of current or potential partners for the California-based technology giant spinning higher.
"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 2.9% at $131.9, on track to add more than $62 billion to its market valuation. General Motors Co is worth around $58 billion at its current share price.
At session high, Apple's value had risen more in the past two days than the combined value of all of Detroit's Big 3 carmakers.
Shares in Tesla fell another 4% after losing 6.5% on Monday, in a session that was also affected by the fallout of its addition to the benchmark S&P 500 index.
"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.
It’s also thought that Apple has decided to tap outside partners for elements of the system which helps self-driving cars get a three-dimensional view of the road.
Shares of Velodyne Lidar, a supplier of lidar sensor systems for Apple 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," said Gene Munster, managing partner at Loup Ventures.