Apple adds $102bn to its market value on back of self-driving car plans

Apple's CEO Tim Cook

Credit:  Pete Marovich/ Bloomberg News

Apple gained as much as 4.9pc on Tuesday following a report that it plans to make its own self-driving electric cars by 2024. 

The rally, its largest since September, saw the iPhone-maker’s market value grow by $102bn to $2.24 trillion. 

Apple’s session high would represent a record close for the stock.

Its reported foray into making its own self-driving, electric cars creates “a new Tesla bear case,” according to analysts at Morgan Stanley.

Apple is reported to have made breakthroughs in battery technology that promise to dramatically decrease the cost of the batteries and improve a vehicle’s range, according to the report. 

Better batteries continue to be seen as the main obstacle to electric cars becoming mainstream, accounting for most of the higher cost of grid-powered vehicles.

Tesla shares fell as much as 5.5pc last night, adding to their 6.5pc drop on Monday. The two-day slump also follows its admission into the benchmark S&P 500 Index before the open on Monday.

“Apple’s potential entry into autos represents perhaps the most credible/formidable bear case for Tesla’s stock that investors have had to consider for some time,” analysts led by Adam Jonas wrote in a note Tuesday. 

Jonas gives Tesla a buy-equivalent rating with a $540 price target, about 15pc  below where it’s trading currently.

The iPhone maker getting into the vehicle market could also pose a threat to legacy automakers like General Motors and Ford., which will have a hard time competing if “Apple were to really throw its weight around,” Jonas said.

For suppliers of electric, autonomous and connected-car systems, meanwhile, Apple’s plans “could very likely mean a significant inflection in the speed and magnitude of a wide range of investments,” he added. 

Lidar suppliers including Luminar Technologies and Velodyne Lidar rallied on Monday after the report and continued to rise Tuesday.

It comes after Elon Musk said he once considered selling the electric car maker to Apple, but the iPhone maker’s CEO blew off the meeting.

In a tweet Tuesday, Musk said he reached out to Apple CEO Tim Cook "to discuss the possibility of Apple acquiring Tesla (for one-tenth of our current value). He refused to take the meeting."

Tesla’s market value is $616bn, as of the close of trading Tuesday. One-tenth of that is $61.6bn.