There's a great Frankenstein's Monster vibe to this story (and the +Boing Boing post that reprinted it), but it's not quite as "horrible" as it sounds:
1. The car was not self-parking.
2. The car has a "City Safety" package designed to keep drivers from rear-ending other cars in stop-and-go city traffic. That's distinct from the "Pedestrian Detection" system — which takes $3K of additional hardware and software. While I think having both systems bundled together would be swell, they really are two different things.
3. Oh, if you punch on the gas, it disengages the "City Safety" package. That probably makes sense for certain applications, but, yes, that's how this particular accident happened.
So … misusing the systems and not being aware of what those systems do in the first place: I'd say it's a PEBCAK (or PEBSAW) error, not some awful Volvo technological sin.
And, yes, even if there is a "Pedestrian Detection" system, I echo Volvo's suggestion that you still don't drive toward pedestrians, any more than you should point a gun at people even if you are certain the safety is on.
Volvo blames horrible ‘self-parking car accident’ on driver
Keeping the car safe is included as a standard feature, but keeping pedestrians safe isn’t.