Self-driving cars use artificial intelligence and various sensors like radar, LIDAR, optics and ultrasonic sensors to navigate roadways without human input. The first autonomous vehicle was invented in 1983 by DARPA. Current self-driving cars are at level 2 autonomy, with companies like Waymo working on level 4 cars expected by 2020. Self-driving vehicles provide advantages like reduced accidents and increased fuel economy but also face challenges like potential hacking, sensor failures causing accidents, and possible terrorism risks.