Jan 5 (Reuters) - Mercedes-Benz said on Monday it will launch a new advanced driver-assistance system in the United States later this year that lets its vehicles operate autonomously on city streets under driver supervision.

The system, which enables a vehicle to drive from a parking lot to a destination, navigating city intersections, making turns and obeying traffic lights, is likely to pose competition to Tesla, the only automaker that offers a similar product, called Full Self-Driving, in the United States.

Mercedes' system, called MB.DRIVE ASSIST PRO, has been on sale in China since late last year. 

The system will cost $3,950 for three years in the United States. Customer can also choose on a monthly or yearly subscriptions, but the pricing for those will be disclosed later.

Tesla's Full Self-Driving package costs about $8,000 as a one-time purchase or $99 per month as a subscription.

Most automakers limit self-driving features in personal vehicles to highways, where traffic patterns are more predictable. Cities pose tougher challenges, including pedestrians, cyclists and unexpected situations.

Tesla is the only automaker that, with its Full Self-Driving system, allows self-driving on city streets.

But like Tesla, Mercedes' system will require drivers to remain alert and ready to intervene at all times.

Mercedes' push into urban driving assistance shows how software advances are moving autonomous technology from limited testing toward commercial rollout. Safety concerns and regulation still constrain full autonomy in personal vehicles.

Tesla Chief Executive Elon Musk previously said he would flood city streets with autonomous vehicles that needed no human intervention. That has not happened yet.

Instead, Tesla has focused on incremental improvements in FSD and has launched a small robotaxi service in Austin, Texas with safety monitors.

Investors still view autonomous technology as a potential long-term revenue driver for automakers.

Mercedes said the system uses about 30 sensors, including cameras, radar and ultrasonic sensors. Those sensors feed data to a computer that can process up to 508 trillion operations per second.

Nvidia said the new Mercedes-Benz CLA, the brand’s first vehicle featuring the MB.OS platform, will feature driver-assistance features powered by the chip designer's "DRIVE AV" software, AI infrastructure and accelerated compute.

The system supports over-the-air updates for future improvements to the autonomous driving tech.

(Reporting by Akash Sriram in Bengaluru and Abhirup Roy in Las Vegas; Editing by Tasim Zahid)