It is. Nobody will buy a full-sized sedan with 800cc engine, unless you are in China.
There are a minimal size powertrains a car body need to be able to house for its size to be sellable.
The matter is you can put much smaller, and cheaper EV powertrains relative to the body size/weight for a much better driving experience.
You can use freed space to pile in extra niceties, which would've required bigger body size for an IC powered car, thus necessitating bigger, more expensive powertrain.
The attraction of hybrids was exactly that you can get a crap engine to provide driving quality of a much more expensive setup, like a good V6, or entry level V8 at lower cost, in a smaller car.
But "just better" is the worst enemy of good enough. You can throw away the whole IC altogether, and provide a 3L+ I6 experience in a micro car.