Software testing is defined as a formal process in which a software unit, several integrated software units or an entire package are examined by running the programs on a computer. All the associated tests are performed according to approved test procedures on approved test cases (Galin, 2004). Testing plays a central role in quality assurance activities of many organizations. Finding more efficient ways to perform more effective testing is a key challenge in testing. It is observed that an efficient testing practice is vital to the quality of the developed product and to reduce the overall development expenses (IEEE, 1990). Galin (2004) explains that software quality has a direct relationship with software testing; hence testing is an important phase of the software development life cycle. According to Perry (1995) about 24% of the overall software budget and 32% of project management budget is allocated for testing. Due to extra pressure to finish projects on time project managers are likely to reduce the testing activities (Galin, 2004). With more usage of software in mechatronics implementation, and increase in complexity of systems, the possible challenges arising due to systematic failures and random hardware failures are increased (ISO26262, 2009). Therefore standards are being developed to provide guidance to automotive based industries to minimize safety related risks to a tolerable level (ISO26262, 2009). The currently available standards such as IEC 61508 on functional safety are not completely dedicated towards the automotive domain based industries, and because there is possibility of interpreting IEC 61508 in different ways it is tough to achieve harmony in functional safety within different automotive domain based industries (Schwarz \& Buechl, 2009). A new state of the art standard ISO 26262 is being developed in collaboration of 9 countries: Belgium, Canada, France, Germany, Italy, Japan, Sweden, United Kingdom and USA. It is planned to be released as International Standard (IS) in June 2011, the latest draft international standard (DIS) is available since June 2009 (Schwarz \& Buechl, 2009). Since this new standard will be soon adopted by all the major automotive domain based industries, it becomes necessary to investigate how the introduction of ISO 26262 standard will affect the existing testing practices in automotive industries. The scientific contribution of this thesis is the study of various software testing practices in a specific automotive company (Volvo Technology (VTEC)) and investigate how the introduction of the new safety standard ISO 26262 will affect the existing testing practices. Questions: 1. What are the different methods and practices being employed for software testing in automotive industries? And what is the co-relation of these methods and practices with the nature of the projects? 2. What software testing activities are performed with help of software testing tools in automotiv e domain, in particular at VTEC