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He evolves it into Jolteon if you win your first battle and the 2nd encounter on Route 22(when he has a level 9 Spearow and his Eevee is level 8). If you lose one(or skip the 2nd encounter), he evolves it into Flareon. If you lose both encounters, he evolves it into Vaporeon. If he evolves it Flareon, Magneton replaces Vulpix/Ninetales whereas Magneton would replace Cloyster if he opts to go with Vaporeon.
First column is Jolteon outcome, 2nd is Flareon and third is Vaporeon. *Edit* Slight addition to add that you can get Vaporeon by losing the first battle and simply skipping the 2nd encounter(as opposed to fighting and losing, although losing both ensures it). It?s better to face Jolteon anyways since Ninetales > Flareon and Cloyster > Vaporeon in my opinion.
Yeah I added that in when I forgot to mention it. It?s truly best to face Jolteon though as it?s speed and decent movepool make it a formidable opponent.