Reduction in cost of lithium ion batteries is essential to the cost walk of electrified vehicles. Electrode microstructure can significantly affect capacity and thus cost. The effect of structure – host–guest versus core–shell – on electrochemical characteristics of transition metal oxide/conducting polymer nanocomposites as the active component of the positive electrode of lithium batteries was studied using two types of polypyrrole based hybrids one prepared with vanadium oxide xerogel and the other with crystalline V2O5. It was shown that the host–guest structure can provide substantially higher stability under charge–discharge cycling, faster transport of lithium ions and allows redox processes at higher potentials.