Why Apple's electric car will be great for Tesla

Media gather around the new Tesla Model S all-electric sedan, at the car’s unveiling in Hawthorne, California in this March 26, 2009, file photo. (AFP PHOTO/Robyn BECK)

Just when it looked like Tesla Motors (TSLA) stock might remain in free fall because of worries about low gas prices and trouble in the China sales operation, along comes Apple. The computer’s giant’s apparent interest in electric vehicles over the long haul puts a new sheen on Tesla, which currently has the leadership position in the luxury electric-car market.

Tesla CEO Elon Musk has said repeatedly that he welcomes other automakers that want to make a serious play in long-range electric vehicles. So far, many mainstream makers seem content with selling “compliance cars” in the market now, sticking electric powertrains in modified subcompacts sold only in states that have a zero-emissions mandate like California. Musk is serious: Remember, he opened Tesla’s patent book to rivals.

Last week ended with reports that Apple, based on sources, may produce an electric car as soon as 2020. The news can only be good for Tesla. Analyst James Albertine of brokerage Stifel said in a note to investors last week that Tesla’s “brand power should not be overlooked” and he says many big-name automakers still don’t really understand the potential of electric vehicles, even those who are making plug-in hybrids. Albertine says plug-in hybrids have serious shortcomings when it comes to electric range and only so-so overall performance with their backup gas engines.

Tesla stock swooned late last week week to $217 a share as the Apple news was still fresh in investors’ minds. It was down Monday, however. The stock was trading at midday at around $207.70, down $9.40 a share or about 4.3%.