The Impact of the Shift Towards Battery Electric Vehicles on the Accounting- and Market-based Performance Measures in the Automotive Industry

This academic work comprehensively explores the transition of the automotive industry towards battery electric vehicles (BEVs). In particular, it focuses on the implications of this shift from both a financial and market perspective. By studying the 16 currently largest car manufacturing companies between 2009 and 2022, this study evaluates how this transition affects financial performance indicator, namely return on assets (ROA), as well as market performance metric – market-to-book (MTB) ratio. The findings of this paper suggest that while adopting BEVs hurts ROA, which can be linked to the competitive nature of emerging technology and its high costs, it was observed to have a positive effect on long-term market performance. This indicates that car companies involved in engaging and investing in battery electric technology tend to have higher market valuations. Furthermore, the study explores how factors such as company size and research and development (R&D) influence the relationship between embracing green innovation and performance measures. The results highlight firm size as a moderator in the relationship between ROA and green innovation and a moderating role of R&D in the link between green innovation and market performance. The study provides empirical evidence of the interplay between BEV sales figures and the main financial and market performance metrics within the key players in the global automotive industry. The findings fill a gap in the existing literature by offering valuable insight into the automotive sector’s adoption of BEVs, presenting a deeper understanding of the phenomenon and suggesting avenues for future research.