A vehicle powertrain includes an engine and an electric motor in parallel hybrid combination. The engine includes a plurality of cylinders and a plurality of selectively deactivatable cylinder intake and exhaust valves so that every cylinder in the engine is characterized by an inoperative condition in which corresponding intake and exhaust valves remain in a closed position irrespective of crankshaft rotation. A controller is operatively connected to the valves and configured to advantageously control the valves and render cylinders inoperative. The powertrain enables the rotor of the motor to be continuously operatively connected to the crankshaft of the engine for unitary rotation therewith. The powertrain is preferably characterized by integrated friction launch wherein an active torque-transmitting mechanism controls vehicle launch.