I don't remember anybody ever complaining about the size of their phone. And although I have literally never heard it, I could in theory believe a small minority of people might want a thinner phone if competitors were able to do it.
I don't buy that the phone manufacturers couldn't work together and agree to release "thicker" phones with reasonable battery though, as they do on just about every other industry feature.
I assume it's just an excuse for them to further close the abilities of right to repair where serviceable or otherwise reasonable batteries would lead to less new phone sales. Exactly the same situation as the screens, I'm sure. Just keep quiet about these things though when marketing this.