arXiv:2508.11257v1 Announce Type: cross Abstract: Large Language Models (LLMs) have shown significant potential in automating code generation tasks offering new opportunities across software engineering domains. However, their practical application remains limited due to hallucinations - outputs that appear plausible but are factually incorrect, unverifiable or nonsensical. This paper investigates hallucination phenomena in the context of code generation with a specific focus on the automotive domain. A case study is presented that evaluates multiple code LLMs for three different prompting complexities ranging from a minimal one-liner prompt to a prompt with Covesa Vehicle Signal Specifications (VSS) as additional context and finally to a prompt with an additional code skeleton. The evaluation reveals a high frequency of syntax violations, invalid reference errors and API knowledge conflicts in state-of-the-art models GPT-4.1, Codex and GPT-4o. Among the evaluated models, only GPT-4.1 and GPT-4o were able to produce a correct solution when given the most context-rich prompt. Simpler prompting strategies failed to yield a working result, even after multiple refinement iterations. These findings highlight the need for effective mitigation techniques to ensure the safe and reliable use of LLM generated code, especially in safety-critical domains such as automotive software systems.