For several economies the automotive industry has been a driver of economic growth. The automotive industry is evolving rapidly on multiple dimensions technological innovation, adoption of stricter government regulations and structural shifts with changing consumer preferences. More recently, amidst growing climate change and human health concerns, huge investments are being pumped into the industry to tackle the twin challenges of emissions and fuel efficiency. The problem is exacerbated in the developing countries because of the relatively inefficient public transportation system, lax emission norms and slow penetration of clean automotive technologies. With this backdrop, the article outlines the challenges faced by the global automotive industry and the strength of technology innovation in helping the industry adapt to some of these changes. The article also throws light on some recent technologies in this domain implemented in the face of tightening environmental regulations.