Mercedes-Benz has rolled out its Drive Pilot system in two of its models in Germany as the first Level 3 system available in the vehicle market worldwide. The European country is also the first in the world to allow Level 3 vehicles to hit the road.

According to the Society of Automotive Engineers, cars can be classified into six levels, from Level 0, which means no automation at all, to Level 5, or full automation.

Many carmakers including Tesla, Mercedes-Benz as well as China's startups are expecting such functions to be a new source of revenue besides selling the cars.

The concept of autonomous vehicles is not new, but automation in any form did not become a reality until Tesla offered such hardware in its vehicles in 2014 and corresponding software in 2015.

So far, Tesla's Autopilot and Full Self-Driving are both considered Level 2 systems.

Mercedes' Level 3 Drive Pilot will offer users the ability to take their eyes off the road and hands off the steering wheel, until the system signals the driver to reassume control.

Currently, the Level 3 system is confined to only certain roads in Germany, and a top speed of 60 kilometers per hour, which means it's presently restricted to situations with slow-moving traffic, but its functionality is expected to be expanded in the future.

"Responsible handling of future technologies such as conditional automated driving is the key to acceptance among customers and in society," said Britta Seeger, member of the Board of Management of Mercedes-Benz Group AG, responsible for marketing and sales.

The automaker is currently working on certification in the US states of California and Nevada and would like to introduce the system into China as well.

Drive Pilot features radar, lidar, cameras, ultrasound sensors, and moisture sensors to read the road. It also relies on a three-dimensional high-definition map, calculated down to the centimeter, which is stored in backend data centers and is constantly updated.

"With Drive Pilot, we have developed an innovative technology that, thanks to redundancies with many sensors, enables safe operation and gives the valuable asset of 'time' back to the customer," Seeger adds.

In Germany, Drive Pilot will be offered in the S-Class at an additional price of 5,000 euros ($5,270), and in the electric EQS flagship at 7,430 euros.

A number of other automakers, including Polestar, are also getting ready for the launch of their own Level 3 systems.

China has not yet allowed Level 3 vehicles to hit the public roads, but Level 2 functions, or ADASs, are fast becoming standard in new vehicle launches in China, especially in electric models.

China's Arcfox launched the Alpha S HI sedan earlier this month, which is the world's first model with Huawei's Harmony operating system and smart driving solutions.

The model sports 34 sensors including cameras and radar, and Huawei's Kirin chip that has a computing power of 400 tera operations per second.

Among other things, the model can maneuver itself on expressways and downtown roads, almost as human drivers do, said Yu Chengdong, head of Huawei's smart car business unit.

He added the vehicle can improve its driving capabilities as it hits the road and gathers more information about traffic.

Analysts said the model's rivals will include SAIC's IM L7 and Nio's ET7, both of which have autonomous driving as one of their selling points.

The ET7 sedan has 33 sensors, including cameras and radar, and four Orin chips designed by US company Nvidia for vehicles with a high level of automation.

Nio President Qin Lihong said that the survival of carmakers in an increasingly competitive market depends on their ability to produce smart vehicles, especially autonomous ones.

Global market intelligence firm IDC said vehicles with Level 2 functions accounted for 23.2 percent of passenger vehicles sold in the first quarter of this year in the Chinese market.

The vehicle market as a whole is moving from Level 2 to Level 3 functions, it said in an April 27 report.