The automotive industry is a highly competitive industry where Product Development (PD) is seen as a crucial process to set the company apart from its competitors and to gain a competitive advantage. In this context, Artificial intelligence (AI) technology is today becoming more widely used to boost productivity and innovation. By conducting literature research and an empirical study the research group aimed to find answers and identify important concepts of the challenges and opportunities with an AI integration in the automotive industries PD. The empirical study involved interviews with relevant firms, such as, the tech firm Nexer Group, Volvo Cars and a firm focused on AI expertise. The thesis uses the TOEframework to evaluate three dimensions - Technological, Organisational and Environmental – in assisting with identifying the different concepts that contribute to the findings and analysis of the thesis. The gathered data revealed multiple concepts indicating that AI presents both challenges and opportunities for the PD in an automotive firm. Opportunities that were identified were: decision-making, boost innovation, assisting engineers. While challenges included: limitations of knowledge, organisational considerations, and ethical dilemmas. Additionally, the concept of Return on Investment (ROI) was identified, however it emerged not only as an opportunity but also as a challenge.