It can be quite a boon for a company when a potentially major competitor withdraws from an industry. News of this happening in the electric-vehicle (EV) sector hit the headlines Tuesday afternoon, and the next day, investors reacted accordingly.

The collective sigh of relief was almost audible, with market players trading up the shares of companies like luxury-SUV maker Fisker (FSRN -12.70%), which closed more than 8% higher, and high-end sedan manufacturer Lucid Group (LCID 0.41%), with a nearly 2% gain. Interestingly, the bullishness didn't necessarily reach overseas, as major foreign peers such as Li Auto (LI 6.69%) dipped in price (the Chinese company fell by 2%).

A tech titan retreats

Bloomberg dropped a bombshell of an article regarding Apple's (AAPL -0.35%) effort at developing an EV of its own.

Citing unnamed "people with knowledge of the matter," the financial news agency said that Apple decided to abandon the pursuit. The article's sources said that the tech giant disclosed this internally on Tuesday, and many of the almost 2,000 employees working on the project would be reassigned to artificial intelligence (AI) efforts.

Apple hasn't yet commented on the story and likely never will. Despite much speculation over its EV ambitions across the years, the company has never formally admitted that it was developing such a vehicle (or vehicles).

The prospect of competing with Apple -- even though the company would have been a late-entering upstart -- was daunting to many in the EV industry. The King of Cupertino is a global behemoth with a market cap of $2.8 trillion. By comparison, Lucid's $7.4 billion and Fisker's $392 million are small fries.

Apple's annual revenue approaches $400 billion these days. Its rock-strong cash position alone gives it the resources to endure a very long and bruising fight for market share. Although Fisker, Lucid, and numerous other EV companies have done well with certain aspects of their businesses, many have yet to prove they can be durable enough for the long haul.

Much to prove

I don't expect the share-price bumps resulting from Apple's apparent withdrawal to last. As big and potentially scary a competitor as it was, Apple was a giant question mark and an unknown quantity on the EV scene. It's possible it would have flopped with such a vehicle, for all its capital and brainpower. So it's not like it was an immediate threat.

Things will likely go back to the status quo, which is a bit dicey. EV sales are slowing notably, and price cuts have sapped profitability (for the few operators in the industry that actually earn a profit, that is). The industry, as a whole, still has a lot to prove to investors.