Shareholders Support Steady Electrification—And They Reward Vertical Integration

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The India strategy of binary electrification has been rewarded by shareholders. Over 10 years, Maruti Suzuki jumped 270 per cent, while Mahindra & Mahindra had 564 per cent return
The journey of automobiles is what Bilbo Baggins of The Lord of the Rings describes as 'there and back again". It starts off as electric, turns to the internal combustion engine (ICE) and comes back to electric.
There and back again, the automobile industry has had four pivotal points. First, was in 1881 when Gustave Trouvé demonstrated that automobiles (his was a tricycle) can carry human beings while being powered by batteries. However, the state-of-the-art batteries in the late 1800s were Lead Acid batteries, lacking the energy density to power automobiles over long distances. This led to the second pivotal moment, development of the internal combustion engine (ICE). Daimler and Benz independently invented the ICE in 1885-1886 and powered automobiles.
The energy density of fossil fuel-based sources made ICE-powered cars mainstream and battery powered electric vehicles were relegated to niche applications and children's toys. This was the equilibrium until an obscure division of Sony in Fukushima, Japan commercialised the Lithium ion battery to power Sony cameras in 1991.
Tesla adopted lithium-ion batteries in 2003 and went into production with the Roadaster in 2008. This introduction of lithium ion batteries to Make Cars Electric Again was the third pivotal moment in automobile history. This led to global automobile manufacturers adopting electric vehicles and announcing massive electrification expenditures in 2022 and that is the fourth pivotal moment. What started off as electric, came back as electric in the end.
However, electrification for any automobile manufacturer is not as simple as replacing the engine with batteries. It involves manufacturing or sourcing batteries, organising them into packs, which are further organized into modules, which are then integrated into an electric motor-powered drivetrain. Just to understand the scale at which batteries are required, we can evaluate the batteries required to hypothetically electrify only the four-wheelers sold in India in 2024.
Assuming a typical sedan requires about 5,000 lithium-ion battery cells, multiply that with the roughly 4.2 million cars sold in India and we look at 21 billion cells or approximately 230 GWh of battery production. This staggering number of battery cells required has caused a worldwide scramble to change business models, announce capital expenditure and setup battery manufacturing plants.
In the electrification game, the strategies taken by automakers can be loosely classified into three groups:
1) Accelerated electrification: Set strict deadlines to electrify, move entirely to electric vehicles and abandon ICE.
3) Hybrid electrification: No strict deadline to electrify, gently introduce hybrids, plug-in hybrids, and fully electric vehicles.
Depending on the maturity of the local automobile industry, companies took a different approach. For instance, car makers in Europe which traditionally competed in the luxury car segment had to announce accelerated electrification due to Tesla's initial launch of the luxury Roadster and later Model S. On the other hand, when Tesla announced the more affordable Model 3, the American car makers had to announce accelerated electrification to stay competitive. This led the transatlantic car makers in 2021-2022 to announce aggressive electrification by 2035 and gamble their balance sheets.
In Asia, the approach has been more cautious as the local automobile industry predominantly focuses on more affordable options. The Indian carmakers seem to have taken the binary electrification route where the ICEs are the profit generating machines which are being slowly supplemented with the fully electric vehicles. The other Asian car manufacturers have taken the gentle electrification path by offering hybrids in addition to the fully electric.
Offering hybrids in addition to fully electric provides strategic advantages like allowing time to setup domestic battery supply chains and the time to develop the charging infrastructure. In addition, hybrids require a tenth of the batteries of fully electric vehicle which allows flexibility to ramp up (more likely) or ramp down (less likely) the electrification path.
To compare how these three strategies performed, we can compare how shareholders rewarded the three strategies by finding share price data from Yahoo Finance. To ensure a long-term picture, we compare the 10-year performance (normalised to June 8. 2015) with the assumption that markets are the best judge of strategies in the long term. Tesla was not included in the comparison as its interests are beyond automotive.
Figure 1: Comparison of the normalised share price of global automobile manufacturers highlighting the role of electrification strategies (normalised to price on June 8, ,2025 from Yahoo Finance)
The accelerated strategy has not been rewarded well by the shareholders. For example, Ford generated 23 per cent return over 10 years, GM generated 77 per cent, Volkswagen was negative. This could have been from the high capital expenditure, technological gaps and the difficulty in moving to all electric vehicles by 2035. But shareholder hesitation towards aggressive timelines does not signal resistance to electrification as highlighted by the performance of the Asian companies.
The India strategy of binary electrification has been rewarded by shareholders. Over ten years, Maruti Suzuki jumped 270 per cent, while Mahindra & Mahindra had a 564 per cent return, putting them in the two of the five best performing major automotive stocks in the world. However, the top performing strategy has been the hybrid electrification strategy followed by BYD. While Kia also delivered an impressive 221 per cent, BYD stands out at 773 per cent.
BYD stands out for a few reasons. First, It's the only car manufacturer that makes all its batteries, in fact, they sell them to other car manufacturers too. Second, BYD is involved in the entire value chain of batteries from mining of the ores, to active material processing, to assembly, it even has its own fleet of ships to deliver its electric vehicles across the world.
Third, from a strategy perspective BYD stopped making ICE in 2022 and pivoted to a hybrids and fully electric vehicles which allowed it to focus heavily on battery manufacturing and technology. This enabled BYD to produce 110 GWh worth of batteries in 2023 (for reference Tesla made 31 GWh of batteries that year). Such vertical integration of batteries manufacturing into their business enabled controlling costs and set technological benchmarks allowing them briefly to be the largest electric vehicle manufacturer in 2024.
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Jumping into electrification without setting up the battery know-how has been negatively viewed by the investors of transatlantic car manufacturers. In contrast, Indian car manufacturers have been prescient to take the steady path and have been earned the approval of their shareholders. But the market's deepest admiration has been for car companies that are vertically integrated.
The writer is a Chief Technology Officer of a deep tech startup working on affordable energy storage systems. He holds a Ph.D. from Brown University in Materials Engineering and a B.Tech and M.Tech from IIT-Bombay. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18's views.
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automobile industry Europe tesla
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New Delhi, India, India
First Published:
August 04, 2025, 14:14 IST
News opinion Opinion | Shareholders Support Steady Electrification—And They Reward Vertical Integration
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