Many vehicle subsystems were in essence mechatronic (electro-mechanical) designs. Modern vehicles have various subsystems which provide mechanical movements which were controlled by electronic and electrical systems. At the same time, they collect and track data about system performance and environmental conditions for on board diagnostics. Advances in mechanical, electrical, and embedded systems were making vehicles more intelligent. However, these mechatronics systems face new challenges including design for compliance and ensuring that all product specifications are transferred into the company's product data management system. This is especially important for electrical and electronic subsystems since they have to comply with ongoing changes related to the management of hazardous substances. Since modern vehicles were being manufactured in a global environment through outsourcing of many different components, this poses challenges with material tracking. Environmental regulations were not only different from country to country but were also constantly changing making it essential that systems are flexible and customizable. In this paper, current environmental regulations related to mechatronic (electro-mechanical) systems and the challenges of these regulations will be discussed.