Apple has cancelled 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 per cent 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, reports Reuters.

"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.