It is based in reality, albeit a kind of self fulfilling prophecy.
As more and more taller cars (large SUVs and pickup trucks) appear on the road the more dangerous it is for smaller cars. The crumple zones on a compact or sedan don't do much good when the front and rear bumpers of SUVs and trucks clear the hoods of smaller cars, effectively putting the bumper at eye level.
I expected that to be illegal, but it seems that it is not in the US. A quick look suggests that for typical unmodified SUVs the issue affects repair costs more than occupant injuries. Homebuilt monster trucks are, of course another issue.
[0] The original "sport-utility vehicles" were built for off-road usage and had 4WD but that hasn't been true of almost anything marketed as an SUV for decades.
This is exactly why Subarus are massively popular in Alaska.
Because that's a kind of regulatory fiction, right there.
So let's cut the crap!
For the majority of the so-called SUV market the "s" in SUV is a long lost myth, and if we're being honest then it's just Utility-Vehicle (UV). But you say they sit higher off the road, perhaps that's technically correct, but actually false when compared to off-road vehicles. But we've already acknowledged SUV's are not really off road vehicles, but rather normal passenger vehicles with normal road tires, normal suspensions, and lower center's of gravity. The Model-y is really just a slightly taller/longer version of the model-3. But how much higher, well if you look at the ground clearance, then it's only ~1 inches higher off the ground. But overall the vehicle is taller, will a larger overhead canopy, and the seats are places over booster blocks to raise the eye-level higher. It's really an illusion, the Model-y is really just a sedan, that technically meets the minimum requirements to say it's an SUV. You can safely consider the modern SUV as the equivalence of old-school station-wagons.
If it waddles like a duck... quacks like a duck... you might be dealling with ducks my dude.
I think that's only half-true. In the US, people weren't buying many wagons when they were available. For the majority of people who don't use their SUVs off road, this seems irrational. I've heard a number of people say that the higher seating position makes them feel safer, though that feeling is not reality-based.