We present a systematic theoretical study of the influence of elastic strain relaxation on the built-in electrostatic potentials and the electronic properties of axial [Formula: see text] nanowire (NW) heterostructures. Our simulations reveal that for a sufficiently large ratio between the thickness of the [Formula: see text] disk and the diameter of the NW, the elastic relaxation leads to a significant reduction of the built-in electrostatic potential in comparison to a planar system of similar layer thickness and In content. In this case, the ground state transition energies approach constant values with increasing thickness of the disk and only depend on the In content, a behavior usually associated to that of a quantum well free of built-in electrostatic potentials. We show that the structures under consideration are by no means field-free, and the built-in potentials continue to play an important role even for ultrathin NWs. In particular, strain and the resulting polarization potentials induce complex confinement features of electrons and holes, which depend on the In content, shape, and dimensions of the heterostructure.