You need to read all the rules.
Were non-OEM mods allowed?
Was the 'flash' a 'restricted access'?
Normally on these kinds of races, you 'self tech' except for safety equipment. If you deliberately went outside the rules, you only DQ if you are formally protested by another entry. It only takes one protest, and normally they must pay for the protest if wrong.
I do find it strange that the only challenge was electricity since all cars have electricity on board. The fuel rules are to stop people from running high boost or internal engine mods in a production car, even pump E-85 allows much higher power output. Methanol is race only. If there was a Volt, it would be disqualified under the rules since it has a significant amount of electricity as a 'fuel'.
Somebody in the race org is a little biased. Water-Methanol is still methanol. WTF? When alcohol is banned, you must use distilled water in your tank, they watch you fill it, and it's sealed. Water will reduce detonation, methanol is a power enhancement that can actually induce detonation.
There are tons of cars that will lap faster than a Model 3. So I'm guessing it's a stock production class with limited allowed modifications.
Like if I put a spoiler or splitter on a car or use parts that increase camber, or remove weight, or use a non-OEM flash, or a wheel size that was not OEM, or tires that are not DOT and widely available, etc, I can run, but I can be protested and DQ'd.