Doesn't sound like AI is necessarily the root the problem. If he's not the person to test, iterate, and deliver quality with AI, he probably wouldn't be without it. You just figured it out sooner.

Or, if you have reason to believe he's got what it takes - treat it like an leaving opportunity, give him room to make mistakes. This is, ime, what a rookie AI user mistake looks like.

It is easy to get carried away by the momentum. Many have fallen into that trap, not all are irredeemably bad software engineers.