Apple has canceled work on its electric car, a source familiar with the matter told Reuters on Tuesday, a decade after the iPhone maker kicked off the project.

Shares of the company were up 0.7% in afternoon trading, having pared some losses from earlier in the trading day.

Several employees working on the electric car project will be shifted to the firm's artificial intelligence (AI) division, according to Bloomberg News, which first reported the development.

"If it is true, Apple will put more focus on GenAI and that should give investors more optimism about the company's efforts and ability to compete at a platform level on AI," said Ben Bajarin, chief executive of consulting firm Creative Strategies.

Apple has so far held back from any big moves in AI, in stark contrast to other tech giants such as Alphabet and Microsoft, which have first-mover advantage in incorporating the breakthrough technology.

Apple declined to comment.

High interest rates to tame inflation have soured consumer sentiment and led to a slowdown in demand for usually pricier electric vehicles, prompting the industry to cut jobs and reduce production.

Several major automakers, including EV market leader Tesla, have decided to pull back on investments, with some shifting plans to focus on hybrids instead of fully battery-powered cars.

Apple kicked off Project Titan, as its car effort was known internally, a decade ago, as a wave of interest in self-driving vehicles swept through Silicon Valley.

Reuters reported in 2020 that Apple was considering releasing a vehicle as soon as 2024 or 2025.

But progress had been uneven even before the COVID-19 pandemic disrupted the global automotive industry.

Apple had laid off 190 workers from the group in 2019 after revamping its software approach.

The design of the concept car also changed, from a radical, steering-wheel-free autonomous vehicle that would have been a departure from traditional automotive design, to a more conventional car with advanced driver-assistance features.