Generally speaking, paying 20% down on a 60 month term will prevent from being upside down however with this particular vehicle, the anticipated energy savings and potential lower TCO and high resale value may prove highly beneficial over that 96 month period and prevent being upside down, esp if you are using the energy savings to pay down the loan.
Perhaps he is intending on putting more down yet needs to keep payments low but is anticipating future income and/or cash influxes that allow it to actually be paid off much sooner.
Only if you are taking on a 96 month loan for the entire cost or very near that and have no prospects of your cash flow increasing over that time, would you be in trouble...and even then, if someone wants the vehicle that badly and are willing to take the risk, that's their choice.
Some people do keep their vehicles that long though it's becoming more infrequent as mfg and technology differentiate model years more dramatically than in the past. It's anticipated the model 3 will retain 50% of it's cost after 160k km = 17.7k km per year over 9 years.
The biggest risk is out of warranty repairs but presuming nothing major there, a model 3, more than most any other vehicle available, holds up to a 96 month term fairly well. Some in sales have been known to lease even a model X and drive it for free due to the cost difference in their high energy use - between it and their previous gas-guzzling SUV (size required for their job).
Obviously it's never a good idea to have a loan that's greater in value than what it was used for but to say "no one should ever extend that far out" simply doesn't take into account the nuances of this particular situation - that of buying a model 3 EV - as well as details about the buyer that you may not appreciate.
