But the touch screen comes with a price you pay for the UI development which is not a small amount. So while installing it might be cheaper, in the end I would argue it's more expensive.

Exactly.

Each of those knobs needs an injection mould, each switch behind it a supply chain. Iterating on digital design is far cheaper as well.

It's far cheaper to use what are effectively 10 year old tablets in the cheaper cars. Since LCDs are being mass manufactured for other things that likely get a nice economy of scale.

Or worse, they charge extra because the touch screen is a luxury product.

The nobs are cheaper, because you don’t need a motor changing the airflow, you just use the power of the human rotating the nob to adjust the airflow to go to the right spot

And you don’t need a cpu nor gpu

Waaay cheaper…