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External sensing applications in automobiles are enabled by Microsystems that can sense and analyze 3D environment. In this paper, we describe the system design of a time-of-flight (TOF) 3D range camera for parking assist and backup application. The camera operates based on measuring the time delay of modulated infrared light from an active emitter, using a single detector chip fabricated on standard CMOS process. The system analysis approach involves a step-by-step process that maps the application requirements to a series of camera design decisions producing the specification for a camera solution that is optimized for size, cost, power and application performance. The analysis process uses the empirical and theoretical performance properties of a 3D TOF sensor and the camera optics. It defines the profile of an optimal light source that delivers the necessary depth resolution for the given volume of interest in the application.