One of the most important key factors for the survival for any medium to large sized automobile industry is innovation. The research and development efforts of the automotive industry are primarily focused on technologies that will make the automobile as environmental friendly, as reasonable, and as secure as possible. Invention of such technologies is the goal of the vehicle manufacturers and other suppliers. Many innovations introduced in cars and trucks have come from merchant companies, including, electronic fuel injection electronic stability control anti-lock braking systems (ABS), auto-dimming mirrors and a host of others.

While the vehicle manufacturers initiate the research and development work, they require their parts suppliers also to develop and refine many of the technologies and devices necessary to make the new systems feasible. The results of new innovations include sophisticated batteries capable of long range on the road without frequent recharging, bio fuels for both gasoline and diesel engines, economical catalysts for fuel cells.

Fuel cell is the next big revolution in the automobile industry. Research into the development of viable fuel cell vehicles (FCVs) is intended for producing economical fuel cells, improving their efficiency, and creating effective ways to produce and store hydrogen and other fuels. U.S. Council for Automotive Research (USCAR), Department of Energy (DOE) and CaFCP, the California Fuel Cell Partnership formed; are intended to encourage private companies and government agencies to work together for FCVs commercialization.