Tesla (TSLA 1.37%) has taken the auto industry by storm and has single-handedly taken electric vehicles mainstream. 

Forced with the decision to change or get left behind, legacy automakers are now racing to put out their own EV models, challenging Tesla's control of the future of the industry.

As a stock, Tesla has been a huge winner in recent years, though bears have always roared loudly, convinced that the company is overselling its future technology and that CEO Elon Musk isn't a trustworthy leader.

Is Tesla stock a buy today? To answer that question, we asked a bull and a bear to debate the subject. 

A Tesla Model 3 driving down a snowy highway.

Image source: Tesla.

Still the clear EV leader

Jeremy Bowman (Bull case): Tesla created the market for electric vehicles and still dominates it today in the U.S. While the company will face increasing competition from both legacy competitors and pure-play EV companies like Rivian and Lucid Group, it will take time for those companies to ramp up production, meaning Tesla should continue to lead the EV market for the foreseeable future.

In the first three quarters of 2022, 65% of the 525,000 electric vehicles registered in the U.S. were Teslas, and it owned 86% of the luxury EV segment. Second place in total EV sales was Ford, with just 7%. In other words, despite the hoopla over its emerging competition, Tesla is still leaps and bounds ahead of its competitors.

Tesla's Model Y and Model 3 were the leading EVs in Europe through October of this year, and the company retains a significant presence in China, the world's largest EV market, but one in which consumers tend to prefer cheaper EVs.

Tesla's track record of execution and wide profit margins should also give investors confidence going forward, as the company turned in an operating margin of 17.2% in the third quarter.

The company also intends to increase production annually by 50% over the coming years, and if it can achieve that, investors should expect similar growth in revenue and profits. 

Finally, Tesla stock is trading at its lowest earnings multiple ever after a steep slide over the past few weeks, as investors have been frustrated by Musk's adventures at Twitter. If he can allay that concern and the company can deliver a strong fourth quarter, Tesla could begin 2023 with a strong rebound.

It's just too expensive

Parkev Tatevosian (Bear case): My bear case for Tesla centers on its expensive valuation. Tesla's stock is trading at a price-to-earnings (P/E) ratio of 42.66, a multiple higher than General Motors (GM 1.21%), Ford Motor Company (F 1.37%), and Toyota (TM -0.38%). These are car companies with decades of experience building and selling vehicles. Sure, Tesla sells only electric vehicles, while the others sell gas-powered and electric-powered cars. 

TSLA PE Ratio Chart.

TSLA PE Ratio data by YCharts.

And Tesla is growing much faster than the competitors mentioned above. Tesla's compound annual revenue growth in the last decade was 74.6%. However, this came at a time when Tesla had limited competition in the EV industry. As several rivals have entered the fray, consumers have plenty of options when buying an EV. This is double the bad news for Tesla.

First, customers shopping for an EV will buy a model that is not a Tesla more often than in years past. Second, competitors are buying up the materials that Tesla needs for its production, raising Tesla's cost of goods sold and constraining units produced. All this would be fine, and I suspect Tesla will be among the leaders in the EV industry for several years, but this is not a company I would want to pay a significant premium to buy. For Tesla to sell more expensively than the legacy automakers is reasonable, but trading at more than 4.5x the P/E ratio of Toyota and 8.0 times that of Ford is a bit much