Transportation Is the ‘Single Biggest Economic Opportunity in America Today’: Allstate CEO
Tom Wilson, CEO of Allstate, the insurance giant, believes an iconic element of the national character is doomed. “Americans’ love affair with the car is going to go away,” he told an audience of executives at Fortune’s Brainstorm Tech dinner on the sidelines of the Consumer Electronics Show in Las Vegas on Monday evening.
Wilson’s view, which he shared over a dinner of halibut and filet mignon at Picasso, a restaurant in the Bellagio hotel, is that the present-day automative system is fatally inefficient. There is “$4 trillion tied up in hardware called cars today,” he said.
For all this investment, few vehicles ever reach anywhere near their full potential. “70% of the time there’s one person in a car with four seats,” Wilson said, bemoaning the underutilization.
It’s this waste—and all its associated costs—that will lead Americans to ditch their four-wheeled fancy. In Wilson’s mind, the outcome is inevitable.
“If it were a manufacturing plant you would shut it down today,” Wilson said of the automotive industry. He added: “We pay too much money moving people around.”
Scott Corwin, who heads Deloitte Consulting’s mobility unit, expanded on Wilson’s remarks. We’re witnessing the “disintermediation of a value chain that goes back to the time of Henry Ford,” he said.
Corwin described how a wave of disruption began to take hold as early as 2000 with the inception of Zipcar, which pitched consumers on the fractional ownership of vehicles. The approach paved the way for future innovations from ride-hailing services such as Uber and Lyft, to shared bicycles and electric scooters, to on-demand buses, and more.
“The adoption rates of these things are extraordinary,” Corwin said. “People are voting with their feet saying they want different forms of mobility.”
Such enthusiasm on the part of consumers has created major openings for nimble businesses. Personal transportation is, Wilson asserted, “the single biggest economic opportunity in America today.”
Karen Francis, another participant on the panel who invests in and advises various mobility-focused companies, cautioned that the transformation of the automotive industry into a so-called mobility industry will not happen overnight. “It will be messy,” the alumnus of Ford and General Motors said.
“It’s not going to be a situation where the technology is going to be perfected and then—poof—it’s going to plug into the car,” Francis said. It’s going to take lots of work to integrate everything, she said, from infrastructure to energy grid to vehicles and other devices.
But even if the path is slow, unpredictable, and complex, the impact will be profound, Francis projected. The impending upheaval will be, she said, “one of the fundamental, structural societal changes in our lifetime.”
“This whole system is going to change dramatically over the next 15 years,” Wilson agreed.
He added, optimistically: “Don’t know how, but it’s going to be better and cheaper.”