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What's the worst that can happen if they do malfunction? Presumably no airbag, but you're no worse off than being hit by a car without pedestrian airbags.

I suppose the other type of malfunction would be accidentally discharge, but this is a) exceedingly rare, and b) no riskier than the airbags already in the car

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Meh, I was thinking more of the latter. First generation sensors I'd imagine would be more prone to erroneous readings, including false positives. Randomly having the car force you to a stop in traffic could be a little annoying.

and they've compensated for that, by allowing the driver to still see once the airbags have deployed.

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