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While Product-Service Systems (PSS) have a potential sustainability impact by increasing a product’s life and reducing resource consumption, the lack of ownership might lead to less responsible user behavior. Smart PSS can overcome this obstacle and guarantee correct and safe PSS use. In this context, intelligent connected vehicles (ICVs) with PSS can effectively reduce traffic accidents and ensure the safety of vehicles and pedestrians by guaranteeing optimal and safe vehicle operation. A core subsystem to support that is the collision-warning system (CWS). Existing CWSs are, however, limited to in-car warning; users have less access to the warning information, so the result of CWS for collision avoidance is insufficient. Therefore, CWS needs to be extended to include more elements and stakeholders in the collision scenario. This paper aims to provide a novel understanding of extended CWS (ECWS), outline the conceptual framework of ECWS, and contribute a conceptual modeling approach of ECWS from the smart PSS perspective at the functional level. It defines an integrated solution of intelligent products and warning services. The function is modeled based on the Theory of Inventive Problem Solving (TRIZ). Functions of an ECWS from the perspective of smart PSS can be comprehensively expressed to form an overall solution of integrated intelligent products, electronic services, and stakeholders. Based on the case illustration, the proposed method can effectively help function modeling and development of the ECWS at a conceptual level. This can effectively avoid delays due to traffic accidents and ensure the safety of vehicles and pedestrians.