The emergence of artificial intelligence (AI)powered autonomous vehicles (AVs) represents a significant turning point in field of transportation, offering the potential for improved safety, efficiency, and convenience. However, the use of AI in this particular context exhibits significant ethical implications that require careful examination. This paper presents an extensive analysis of ethical considerations related integration of AI in AVs. It employs a multi-faceted approach to investigate ethical concerns of decision-making powered by AI including well-known trolley problem and moral judgments generated by AI algorithms. Additionally, it explores the complexities within safety and liability issues in the occurrence of incidents involving AVs, addressing the legal and ethical obligations of manufacturers, regulators, and users. The paper addresses the complex interaction between AI-driven transportation and its potential effects on employment and society. It provides an analysis on displacement of jobs and associated disruptions in workforce, as well as consequences for urban planning and public transportation systems. Furthermore, this study investigates the domain of privacy and data security in AVs, delving into issues related to gathering and utilization of data, as well ethical handling of personal information. Finally, this paper proposes a cyclic framework for ethical governance in AVs integrated with AI. It outlines future directions that prioritize transparency, accountability, and adherence to international humanitarian regulations. The study's findings and recommendations represent significant importance for policymakers, industry participants, and society. These stakeholders play crucial role in guiding the progress of AI in AVs, to create a transportation environment that is both safer and more ethically aligned.