DETROIT—The Detroit muscle car horsepower race has escalated now that Ford Motor Co. has introduced its 2013 Shelby GT500 Mustang—and its 650-horsepower V-8 engine.

The company unveiled the GT500 and a refreshed version of its regular Mustang on Tuesday at the Los Angeles Auto Show.

Ford says the Shelby version will have the most powerful production V-8 engine in the world, with a top speed of over 200 mph.

The 5.8-litre engine is mated with a six-speed automatic transmission. The company has yet to release gas mileage but said it would be good enough to avoid the U.S. tax on gas guzzlers.

The GT500 beats out closest rival General Motors Co.’s Corvette ZR-1 by 12 horsepower.

It also beats out others in its segment, including the Dodge Challenger SRT8 (470 horsepower), the much anticipated Chevrolet Camaro ZL-1 (580 horsepower) and Nissan’s GT-R (530 horsepower).