Your teacher may be confused because of the concept of conservation of energy, which says that the total energy of an isolated system does not change. As a result, they might erroneously believe this means that the kinetic energy must decrease while going uphill, leading to picking answer C.
The flaw in this logic is that there are (at least) 5 relevant parts to understand the total energy here. You have:
- Gravitational Potential Energy. As the car moves uphill this increases.
- Linear Kinetic Energy, which is what you and your teacher disagree over.
- Rotational Kinetic Energy of the wheels. Assuming the car is not slipping, this will be proportional to the linear kinetic energy so it does not change the conceptual picture here.
- Chemical Potential Energy from the power source (gasoline or battery).
- Energy which will be lost to the environment due to e.g. drag and friction. Cars are not actually isolated systems (especially gas cars, which need to intake oxygen to burn fuel and exhaust the resulting fumes). This isn't important here but is needed for the accounting to work.
Because the chemical potential energy is always decreasing (that's what powers the motor to turn the wheels), there is no requirement that the linear kinetic energy decrease just because the car is moving uphill. If there were, it would be impossible to start a parked car going even slightly uphill.
As for the answer, under normal English conventions, I would usually take "accelerating uphill" to mean that the velocity and acceleration are both pointed uphill, meaning the speed (and therefore kinetic energy) is increasing. Therefore I would have picked the same answer D as you.
With that said, "accelerating uphill" is actually quite an ambiguous phrase. Could it mean just that the acceleration is pointed uphill and the velocity is actually downhill? For example "As the car rolls backward down the hill, the driver presses the pedal to accelerate upward". This could lead you to pick A. Or could it mean that the velocity is pointed uphill and the acceleration is actually downhill? We would more typically to this as "deceleration while going uphill" but it's not technically wrong to call it acceleration as well (just acceleration that happens to be backwards). That might lead to answer C being chosen. We need to know both the direction of the velocity and the acceleration here, and the phrasing of the question is imprecise enough that it is difficult to be certain of either of them. Only your teacher knows what they intended it to mean, but in my opinion your answer is the most reasonable one.
