I think Vertu Motors (LSE: VTU) could be one of the best ways for me to execute this plan. And at current prices below £1 per share, I think it could be too cheap to miss.

A growing market

Britain is the fifth largest European market for electric passenger vehicles. Yet according to researchers at Statista battery- and hybrid-powered vehicles command a market share of below 20%.

This gives car retailers like Vertu Motors plenty of upside to exploit as interest in EVs takes off. According to the Office for National Statistics, 44% of Britons say they are likely, or very likely, to switch to an all-EV from one that uses fossil fuels over the next decade.

Four out of 10 of these people said that they plan to make the switch over the next five years too.

BIG business

I think it’s particularly well-placed to capitalise on the EV boom. The internet is becoming an increasingly important channel for car retailers in the post-pandemic landscape. But customers who are looking to buy an EV are more likely to visit a showroom for face-to-face advice on these new technologies.

It has a huge network of almost 160 dealerships on its books. This broad geographic wingspan could give it the edge when it comes to winning EV customers.

I also like Vertu because of the huge range of EVs it stocks. The business has dealerships representing 32 of the world’s largest car manufacturers. This means it sells most of the country’s most popular EVs like the Kia e-Niro, Volkswagen ID.3 and Nissan’s Leaf.

Supply strains

The long-term outlook for Vertu is pretty bright, in my opinion. However, I am concerned that profits could suffer if problems with car production continue and stock levels are squeezed.

Latest Society of Motor Manufacturers and Traders (SMMT) data shows new car registrations fall 15.8% in April. Just 119,167 units rolled out of UK showrooms last month, it said on Thursday, with “global supply chain shortages” hampering new vehicle deliveries. Vertu has warned of the uncertainties that these supply issues pose to its business.

A cheap penny stock I’d buy

Still, I think the returns I can expect to make from owning this one over the next decade make the penny stock a great buy today. And at current prices of 51.2p per share, I think Vertu is particularly attractive. This means that it trades on a forward price-to-earnings (P/E) ratio of just 7 times.

What’s more, Vertu also offers great value in terms of dividends. Its forward yield sits at 4.1%, ahead of the 3.7% average for UK shares.

I think Vertu’s a great way for me to make money from the green revolution.

The electric car giant has had a pretty torrid past few months though. So what are its prospects for the future? Is it a bargain for me at these levels or just another tech bubble to avoid?

Tesla share price ups and downs

At the start of the 2021, headlines focused on how Tesla had overtaken Facebook to become the fifth-largest US company by market cap. 

Such rocketing share price growth has reversed in recent weeks, and Tesla’s market cap has settled from a high above $800bn to under $600bn.  Tesla still maintains incredible retail investor support and boasts legions of fans. Its products remain desirable, partly from all of their market-leading gadgets and partly from the highly charismatic CEO Elon Musk.  

Musk’s disruptive attitude, whether that’s in building battery storage farms or investing billions of company cash into Bitcoin, has garnered him attention worldwide. And yet I still have significant concerns about the business fundamentals.

Bullish

Cathie Wood, the head of ETF issuer and fund manager ARK Invest recently placed a $3,000 target price on Tesla shares. But it’s difficult to see where such spectacular valuations are coming from. 

Tesla’s economic moat is failing. In fact, it’s beset on all sides. Firstly by start-ups like NIO, which are swooping in to siphon off some of the day-trader excitement. And secondly by more profitable legacy car manufacturers with far better supply chains. These include Mercedes and Volkswagen. 

It’s been widely reported that Tesla managed its first full-year of profit in 2020: $721m against a loss of $862m in 2019. But these numbers were heavily reliant on Musk selling carbon credits to other manufacturers, not from actual car sale profits. 

Tesla total recall

Critics have long savaged Tesla for its safety record, but these concerns were swept aside in the wake of its soaring share price. 

And Musk’s $1.5bn Bitcoin buy, as well as accepting the cryptocurrency in payment for its vehicles, certainly helped to turn headlines away from Tesla’s struggles in China. 

Lest we forget: in early February Tesla was forced to undergo its third product recall in under a year. This time, the 36,126 of its Model S and Model X cars were recalled for touchscreen problems. Germany’s automotive regulator is also investigating the company over similar failures. In November 2020 Tesla recalled up to 48,000 Model S and Model X vehicles over suspension issues. 

The wider market

Looking at sales data, the wider trends are obvious. January 2021 figures from the Society for Motor Manufacturers and Traders paint a stark picture. Sales of petrol vehicles plummeted more than 50% year on year. And battery-powered electric vehicles saw a 54.4% rise. 

Electric vehicles only make up 6.4% of the total car market share, but that is up from 2.7% in 2020. So the transition is still in its early stages. I like to buy companies I think will be market leaders in emerging fields. 

So will Tesla lead us there? 

It might. But the competition is catching up fast. I would caution that with tight profit margins, more rivals and concerns about product safety issues, Tesla shares could fall further.