The manufacturer gets sued. The manufacturer would keep insurance and lawyers for these lawsuits.
This is not a given. The plaintiff has to right to sue all parties that the plaintiff believes contributed to the accident. It's up to the courts to dismiss the suit against the owner of the vehicle or the person determined to be in a position to take corrective action.
I don't believe the court will automatically dismiss the suit since the person in the vehicle still played a role in the accident by not taking corrective action such as hitting the big red stop button. The owner of the vehicle could still be held liable if the court decides that the owner allowed the use of his vehicle by someone unable to take corrective action, but this type of liability is usually dismissed unless the plaintiff can show that the owner knew that the person they allowed to use the car would be unable to take corrective action.
It would probably be more accurate to say that the manufacturer can assume the liability and court costs for the third parties but I think, if you look in the fine print, you'll see that they only assume liability for any defects or deficiencies in the AI software. I bet the owner will still be held liable if the owner didn't maintain the vehicle and its sensor in good working order.