Shower/Tub Lukewarm-cold After Tankless Install

Hello!
New to the forums, I have a master electricians license for whatever that is worth.

So I helped out my best friend yesterday and installed his new On Demand HW heater for him. It's a Stiebel Eltron 24 Plus Electric unit. It's a 24KW unit that has an integrated control that reduces the flow rate in times of increased demand in order to keep the outlet temperature consistent. So his house has 2 full baths, laundry, kitchen with DW, couple hose bibs. The Stiebel Eltron 24 Plus is rated to handle a 2 bath house and is actually the biggest single phase unit the manufacturer makes so a unit any larger requires a 3 phase supply and would probably be installed in an office or something.

The plumbing for the 2 Baths is close to the heater. The Unit is installed in a mechanical closet with laundry and the incoming water main, the Mechanical closet is back to back with the basement bathroom, and directly above the basement bathroom is the upstairs bathroom and adjacent kitchen. Basically one main plumbing wall.

So I ran (2) 60A 240V circuits per manufacturers specs to the unit, mounted it onto the wall, hooked up a couple stainless steel braided hoses to the cold inlet and the hot outlet, turned her on, set the temp at 109, yada yada.

Downstairs bath sink...hot water.
Downstairs bathtub...hot water.
Upstairs kitchen sink...hot water.
Upstairs bath sink...hot water.
Upstairs tub...warm...cold...luke warm..cold...luke cold..luke cold.

So me and my buddy spent a few hours screwing around trying to get it to work. Set temp up to 120, reset new heater, opened hose bib outside while running the tub, tried running it super slow to reduce the gpm demand on the heater, adjusted the mixing valve, etc.

So I shut all the fixtures off, shut the supply to the On Demand heater off, went to the downstairs bath sink and started running just the hot water.

Losing pressure...lukewarm...losing pressure...all of a sudden it regains pressure and cold water is coming out. Repeated this experiment a few times and also on the upstairs bath sink.

Turned the HW supply valve back on, went to the upstairs tub, took the mixing valve trim off and turned the knob on all the way to HOT. Put one hand on the incoming hot line to the valve and one in the water coming out of the faucet. Piping to the valve was getting HOT, water coming out remained luke warm/cold...then suddenly the incoming hot line would get cold.

So I think cold water is going through the mixing valve into the hot water line, due to greater flow from the water main than what is coming out of the new heater. The reason this wasn't happening when they had a tank was because the flow rate was higher out of the tank. Solution would be a new thermostatically controlled mixing valve.

So my question...based on my story can anybody tell me what the hell is going on and how to fix it?