Tesla Motors (Nasdaq: TSLA) has been one of the best ways to cash in on the growing demand for electric cars. After climbing steadily for three years, shares have shot higher this year, surging 390% in just the past nine months.#-ad_banner-#

But despite that very bullish move, shareholders got a big scare last week when a video of its Model S EV catching fire went viral across the Internet. That sent Tesla plunging 10%, carving about $3 billion off its market cap.

While there’s no question Tesla is a great company, it’s a good example of the risks associated with investing in original equipment manufacturers (OEMs): Consumers are fickle, and bad public relations can be a killer. And that can spell big trouble for shareholders.

There’s a better way to cash in on growth in the electric car industry.

Unlike OEMs, there is little model-specific risk. And unlike Tesla, trading with a ridiculous valuation, shares of this global leader are trading at a relative discount after a short-term pullback. Take a look at the dip below.

The chart may look a bit gloomy right now, but the pullback is creating a great opportunity to buy a global leader while shares are on sale.

Polypore International (NYSE: PPO) is a $1.9 billion global leader in the lead-acid and lithium-ion battery markets. The company’s largest segment is the traditional lead-acid battery market, where it derives about 47% of its annual revenue. That division continues to perform well, with recent second-quarter results showing 9% revenue growth from last year to $80 million.

	Flickr/Wesley Fryer
	More than 6,000 lithium-ion batteries like this one are found inside the car battery used by the Tesla Model S.

But the real driver of growth for Polypore is its lithium-ion battery segment, a major supplier of lithium-ion batteries for electric cars. Polypore is already one of three market leaders in the space with 20% market share. Its roster of clients comprises the industry’s biggest and most powerful brands, including Ford (NYSE: F) and General Motors (NYSE: GM), Toyota (NYSE: TM) and Nissan (OCT: NSANY).

The division struggled through a challenging 2012 when electric-drive vehicle (EDV) sales came in below expectations, leading to bloated customer inventories and heavy margin pressure. That’s the reason for the big dip in the chart above. Many investors sitting on big gains from 2010 and 2011 chose to take some profit with bad news in the air.

But now the reversal is in play, on both the chart and the income statement. Polypore’s recent second-quarter results saw a huge rebound in lithium-ion battery sales, jumping more than 150% from last year to $42 million as electric car sales once again surged higher. The company also reported impressive margin strength, reporting an operating margin of 75%. That big rebound has gone a long way to support sentiment, earnings and shares.

But that impressive turnaround is just the beginning of a long-term trend. Because Polypore is in position to cash in on booming electric car sales. August was a record month for domestic electric-car sales, jumping an eye-popping 50% from the previous month, to 11,363. And that trend is showing no sign of slowing, with year-to-date electric-car sales of 60,000, already well past last year’s total of 53,000. Polypore will continue to benefit from supplying industry-leading electric-car makers with lithium-ion battery technology.

The good news has analysts looking for big returns from Polypore, calling for 38% earnings growth in 2014 and average annual earnings growth of 16% in the next five years.

Risks to Consider: Polypore’s lithium-ion division will be driven by sales volumes in electric cars. Weakness in 2012 before a big rebound in 2013 underscores how vulnerable the high-growth electric-care industry is to short-term fluctuations in demand.

Action to Take –> Polypore’s most important division is back on the mend after a tough 2012. That has shares stabilizing after a sharp 43% drop in the past two years. Although that contraction did sweeten the valuation, Polypore isn’t exactly a value stock. Shares currently trade with a forward P/E (price-to-earnings) ratio of 35, which is a premium to 10-year average of 23 and peer average of 18. But as a growth stock with mounting momentum and big long-term potential, Polypore is still a buy at current levels and below $45.

P.S. My colleague Andy Obermueller, editor of StreetAuthority’s Game-Changing Stocks advisory, is predicting 2014 will officially mark the beginning of the “death of the gasoline engine”…