Electronic packaging for automotive applications are at particular risk of thermomechanical failure due to the naturally harsh conditions it is exposed to. With the rise of electric and hybrid electric vehicles (EVs and HEVs), combined with a desire to miniaturize, the challenge of removing enough heat from electronic devices in automotive vehicles is evolving. This paper closely examines the new challenges in thermal management in various driving environments and aims to classify each existing cooling method in terms of performance. Particular focus is placed upon emerging solutions regarded to hold great potential, such as phase-change materials (PCMs). PCMs have been regarded for some time as a means of transferring heat quickly away from the region with the electronic components and are widely regarded as a possible means of carrying out cooling in large scale from small areas, because of their high latent heat of fusion, high specific heat, temperature stability, and small volume change during phase change, etc. They have already been utilized as a method of passive cooling in electronics in various ways, but their adoption in automotive power electronics, such as in traction inverters, has yet to be fulfilled. A brief discussion is made on some of the potential areas of application and challenges relating to more widespread adoption of PCMs, with reference to a case study using computational model of a commercially available power module used in automotive applications.