Key Points

• General Motors' returns have dwarfed that of its peers over the past three years.

• While the competition is improving hybrid offerings amid a boom, GM is unveiling new V-8 engines.

• The automaker also has a plan, albeit trailing its peers, to attack the growing demand for hybrid options.

• 10 stocks we like better than General Motors ›

To say that General Motors (NYSE: GM) has been doing a lot correctly lately might be an understatement. If the past three years have been a race, GM would be lapping its nearest rivals in Ford Motor Company and Stellantis -- and even its Japanese competition. If a picture is worth a thousand words, this graph says many more.

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So, if the automaker is doing so many things correctly, why is it betting big on hunky V-8 engines when the competition is driving toward the hybrid sales boom? And will the decision cost investors by bringing its stock gains back down to earth?

Let's set the stage

As regulatory and policy changes severely hinder electric vehicle (EV) sales growth in the U.S., consumers have flocked to hybrids as gasoline prices continue to rise amid the Iran conflict. GM made a big gamble with its aggressive strategy to try to skip over the hybrid middle phase and focus more heavily on the long-term EV stage -- a costly mistake that forced the company to take billions in charges and write-downs.

Its competitors invested more in hybrids through this whole process, and they're reaping the benefits. Toyota, at the other end of the spectrum, accounted for 49% of U.S. hybrid sales during the first quarter of 2026, according to Cox Automotive.

On the other hand, GM currently sells one hybrid vehicle, and that's a Corvette. In comparison, Ford has a profitable and broad list of hybrid options. It has strong sales from its F-150 and Maverick hybrids, while also discontinuing light-duty diesels. So is GM doubling down by introducing new V-8 engines and high-mileage diesels instead of rebounding with more hybrid options?

What GM is doing

On Sept. 17, GM unveiled two sixth-generation small-block V-8 engine options for its redesigned Chevrolet Silverado 1500 and GMC Sierra 1500 pickups that go on sale this fall. This is happening even while dealers, investors, and analysts see competitors building hybrid powertrains as gasoline and diesel prices are up 39% and 73%, respectively, compared to a year ago, according to the AAA.

This looks like a big mistake at first glance, but there are a couple of reasons behind this decision. First, investors know that full-size trucks are the industry's bread-and-butter for juicy margins and big profits, and GM needs to optimize those sales to help offset increased costs from tariffs and the billions in write-downs the automaker took over the past year for driving too fast on its EV strategy.

Second, investors have to consider that these engines aren't developed overnight. The automaker has been working on them before the Trump administration threw multiple curveballs at the automotive industry, and GM will continue to deliver new technology with its gasoline-powered trucks that, even with an eventual transition to EVs, will still have a market.

What it all means

John Murphy, who became a widely respected voice in the automotive industry during his 26 years as Bank of America's automotive analyst, said that General Motors' avoidance of hybrids "is not as clear a major mistake as I think some people believe."

And although the company sells only one hybrid currently, it's not going to stay that way. It is bringing some plug-in hybrids to the market as soon as next year. There aren't clear details yet, but the automaker is likely to focus on adding plug-in hybrid options to its best-selling vehicles and perhaps those that share platforms. The Chevrolet Equinox, Buick Envision, GMC Terrain, and Cadillac XT4 all share a platform for which a hybrid powertrain could be added.

The headlines of GM investing in more gas-guzzling V-8 engines while consumers are more rapidly buying hybrids sound worse than they are. Management is doing a lot of things right. The graph at the beginning isn't going to change because of this strategic move.

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Bank of America is an advertising partner of Motley Fool Money. Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool recommends General Motors and Stellantis. The Motley Fool has a disclosure policy.