AI and machine learning are the brains behind autonomous vehicles, enabling them to perceive, decide, and act in complex environments. These technologies power crucial functions like object detection, path planning, and vehicle control, allowing AVs to navigate safely and adapt to new situations. Key algorithms in AV development include supervised learning for perception tasks, reinforcement learning for decision-making, and deep learning for end-to-end solutions. Challenges involve ensuring robustness, safety, and ethical decision-making in diverse real-world conditions.