This little tip was surprisingly hard to find — only mentioned a couple times online — so I figured I'd do my part to spread the word.

To enable CarPlay in Xcode's iOS simulator, execute the following terminal command:

defaults write com.apple.iphonesimulator CarPlay -bool YES

Restart the simulator if it was currently running, and then in the menu bar, go to Hardware > External Displays > CarPlay.

Easy peasy.