“Let’s not indulge US regulators fantasies that they get to dictate the product design of cars from non-US countries.”

Of course governments have the ability to decide what products are sold in their countries and how.

They ultimately don't have that power. All they can do is block the sale of products. Arguably, that power gives them leverage to negotiate the availability of some products or features. But as this Apple case shows, this negotiating leverage is limited.

Why would it be ok that a monopoly business prevents free competition and consumer choice by only allowing certain or a single model provider that likely gives them kickback via some opaque business deal?

> EU regulators' fantasies that they get to dictate the product design of products from non-EU countries.

They should get to regulate the design of products from non-EU countries only those that are sold inside EU.

The fact that it is not cost effective for Apple to design two separate products(software or hardware) for EU and non-EU is an Apple problem.