The Department of Transportation and the National Highway Traffic Safety Administration announced this week that they plan to press ahead in the federal regulatory process with a technological sea change in the way cars are driven.

It's called vehicle-to-vehicle technology, a GPS-derived feature that allows cars to sense proximity to one another. It automatically applies steering, braking and other inputs to avoid collision, debris, or to let emergency vehicles pass.

In a Monday press conference, DOT Secretary Anthony Foxx said the innovation will have a profound effect on reducing accidents. "Early studies indicate that V2V has the potential to help drivers avoid 70 to 80 percent of vehicle crashes involving unimpaired drivers," he said.

But V2V raises a new world of concerns.  Tom Kowalick, one of the engineers on V2V's design team, told Fox News, " It's a step forward in safety. But two steps back in privacy."

That's no small concern for Americans already troubled by government and industry's ability to monitor their private lives. "The worry is... Hey we see you go too fast, you might want this insurance carrier, or we see you drive my Starbucks every day. We have a deal with Starbucks maybe you want this discount," says Justin Brookman, the Director of Consumer Privacy at the Center for Democracy and Technology.

The Alliance of Automobile Manufacturers, the chief lobbying arm of the auto industry, has thrown its support behind  V2V technology, but added in a statement, "What remains to be addressed is security and privacy."

DOT's Foxx says he is aware of such concerns. "The technology does not involve exchanging or recording personal information. The way it works, V2V doesn't even track vehicle movements."

Another concern is that V2V, like so much of today's technology, could be vulnerable to hacking. "Smart grid, smart infrastructure, smart cars, security is going to be a tremendous concern," says Brookman.

NHTSA is currently finalizing a report on V2V for public comment in the coming weeks. But it may be years before we see V2V in all new cars. And even that is an interim step toward a future where, with the help of V2V and road sensors, cars drive themselves while motorists fill a less active role of monitoring their systems.