However, GM’s sales volumes were much higher than expected. These assurances came in the form of a 10-year exclusive contract for Fisher Body to supply car bodies to GM. Fisher made the investment in the equipment, but only after assurances that it would be able to recover its investment and GM would not take advantage of it. According to one version of the story, General Motors wanted to begin selling metal closed-body cars – a completely different body style than used by any other automaker at the time, and a component that required very expensive stamping equipment to make. Perhaps the most examined example is General Motors’ purchase of Fisher Body one hundred years ago. This debate has played out in many other industries. VERTICAL INTEGRATION ACROSS THE CENTURIES In the case of nascent markets like household energy access in low- and middle-income countries (LMICs), vertical integration may be a necessary step to overcome the reluctance of service providers to make these investments early in the life cycle of the market. It is a strategic decision for a business that depends on the presence of potential service providers, and the perceived risk of investments specific to that particular context. We argue that vertical integration is neither inherently good, nor bad. Indeed, some wonder whether companies in nascent energy markets might be better off avoiding vertical integration altogether and moving straight to disintegrated models. Disintegration, or the outsourcing of aspects of the business model to service providers, provides more opportunities for specialization, which can result in more cost-effective business models. A topic of some debate within the PAYG sector is whether unbundling these business models, perhaps more accurately described as “disintegration,” is good or bad for the sector. Pay as you go (PAYG) off-grid energy access business models are often vertically integrated, in that they include elements of manufacturing, distribution, consumer financing, payment collection and after-sales service.
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