The article isn't really helpful and doesn't provide any meaningful information. What was the diagnosis for the "bad engine"? It borders on click-bait, IMO.
Anyway there are few things I find interesting:
1. The dealership says the engine was over revved "several times". Multiple occurrences to me sounds like simply hitting the rev limiter. No harm no foul there because the rev limiter did it's job.
2. If it was a money shift, the car would have died at the scene of the crime. I don't know of cars being drivable after that happens
3. The guy admitted to taking it to a drag strip. That alone will put you on the bad side of a dealer or manufacturer, but you should also know you "pay to play" the minute you put it in a HPDE, drag strip, or other competitive environment. No matter the capabilities of the car or how it's marketed, I don't know of any brand that will do a warranty claim for something that happened at a track. Your car insurance doesn't even cover you in those instances. Either way, drag racing you shift up and might hive the rev limiter, but I can't imagine shifting down to cause a money shift.
There is more going on here that isn't being reported. It all doesn't add up for me, but the admitted drag strip time likely killed his case.
If we take the story at face value and ignore some of the above facts (i.e. a money shift happening), simply denying a warranty claim for hitting the rev limiter is a huge foul. Those things kick on to prevent any damage to the engine and many are likely set hundreds of RPM's below the actual point an engine would pop.
At my autocross event that past weekend, there were two Veloster N's and a brand new Elantra N that got through all their runs just fine. The Veloster's were even tuned/modded.
@Klasse Act - How does the rev limiter work in the Elantra N? Is it a soft limiter where you just bounce off it and maintain revs at a fixed point, or is it a hard cut off that cuts fuel?