They mandate a way to view the backup camera. I suppose at that point it incentivizes auto makers to add additional functionality to that screen. There is only so much room on the dash after all.

I'd also be surprised to learn auto makers aren't doing this sort of thing because it tends to sell better. Similar situation to phones getting larger every year despite some segment crying for smaller phones.

Once you're sticking a big ol' screen in the driver's vision during backup time, that screen becomes obvious real estate for any other user interface you may want. Buttons and dials are cheaper than a touch screen, but buttons and dials+a screen are more expensive than a touch screen.

If I am not mistaken those touchscreens in cars are cheaper than the buttons they replaced (citation needed).

Seems plausible, at least. A button is cheaper than a touchscreen, but you can replace N buttons with one touchscreen. (Citation still needed, though.)

I guess at some point a (modal) GUI is more space efficient than individual controls.

At some point cars had screens, surrounded by physical buttons. I always thought that was a great compromise.