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A Mercedes that basically drives itself

By Doron Levin, contributor

Daimler’s current S-Class.

FORTUNE — Daimler AG’s next-generation Mercedes-Benz S-Class, to be introduced early next year as a 2014 model, may turn heads for its new body styling, engine choices and features. But what is likely to excite technology geeks about the new top-of-the line luxury sedan are the latest active-safety technologies that take decisions from drivers and hand them to artificial intelligence systems.

Naming its system “intelligent drive,” Daimler will offer new gadgets for the S-Class such as stereo cameras and rear radar, plus advanced software that can spot a dangerous situation and override braking, acceleration and steering to prevent or mitigate an accident.

Daimler is among several automakers worldwide rushing to equip their high-end models with safety advances, which soon will be mandated by U.S. and European regulators in order to earn top safety ratings. But the big payoff may come in less than a decade, as more and more cars gain the ability to drive themselves. “Figuratively speaking, the next S-Class won’t just have eyes at the front; it will have 360-degree all-round vision,” said Thomas Weber, head of Mercedes-Benz research and development in a statement released in November.

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The new features will include steering and lane assist based on the position of a car in front in slow-moving traffic; pedestrian detection and braking; brake assist when extra force is needed to avoid an accident; detection of oncoming traffic and prevention of unintentional movement from a lane; night vision; and drowsiness detection and warning.

Stereo cameras, positioned behind the windshield, will process information with the help of advanced algorithms to identify traffic signals, vehicles and pedestrians so the safety systems will respond correctly.

Daimler is the latest among automakers to offer advanced safety devices that are integrated and controlled with artificial intelligence. Audi, the luxury division of Volkswagen AG, is expected to announce a system next month at the Consumer Electronics Show in Las Vegas that lets its next-generation A8 luxury sedan be driven on “automatic pilot” in low-speed stop-and-go traffic.

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Volvo, BMW, Ford (F), Citroen, Hyundai, Honda (HMC), and GM (GM) are among the automakers developing or offering similar advanced safety systems based on sight and radar recognition, according to Prof. Amnon Shashua, chief technical officer of Mobileye, an Israeli maker of chips that serve as platforms for advanced driver safety assistance.

Mobileye has shipped a million of its chips since it began production in 2007 and expects to ship two million chips in 2013. Shashua said his company has about an 80% share of the market for such chips; Daimler, he said, isn’t a customer.

In the next year or so, Shashua said, “almost all cars will offer advance collision warning as an option.” An outgrowth of advanced cruise control, in which a radar can be set to keep a car under a certain speed and also from advancing too quickly on a vehicle ahead, the latest systems warn of danger and may apply brakes. “The first models to get these technologies were luxury cars,” said Shashua. “In 2011 things began to change as regulators in the U.S. said sticker must indicate the availability of forward collision warning.”

Toward the end of this decade, he forecasts, cars will be able to perform about 90% of the tasks now done by drivers, and with fewer accidents. Whether society wants to go the last 10% and allow cars to operate by themselves, with passengers only furnishing the destination, remains an open question.