A vehicle includes a powertrain having an engine and an electric machine (M/G) connected by an upstream clutch, and a gearbox connected to the M/G by a torque converter. A controller is configured to, in response to a Park or Neutral gear selection and an electrical power request from the M/G, operate the engine at an engine speed and an engine torque based on the request and M/G speed and torque for improved powertrain efficiency. A method is provided for controlling a vehicle. In response to a Park or Neutral gear selection and an electrical power request from the M/G, the engine is operated at an engine speed and an engine torque based on the request and M/G speed and torque for improved powertrain efficiency.