A vehicle is provided with a powertrain including a battery-powered electric motor, an internal combustion engine, a transmission, and a powertrain controller. The controller is programmed to permit an upshift of a transmission gear ratio while a powertrain torque demand is less than a forecasted available powertrain torque sustainable over a predetermined upcoming duration of time. The controller is also programmed to inhibit an upshift while the torque demand exceeds the forecasted available powertrain torque to reduce successive gear shifts. The controller may be further programmed to, in response to battery a state of charge being less than a threshold, reduce the forecasted available powertrain torque by an amount sufficient to provide a recharge to a battery. The controller may be further still programmed to reduce the forecasted available powertrain torque by an amount sufficient to restart the engine while the powertrain is operating in an engine-off traction mode.