220v, 3-wire circuit, 4-wire cooktop: tying neutral & ground - variation on common question
The exception that allows grounding your range, ovens, cooktops and clothes dryers via the current carrying neutral (which is called &quot;the grounded circuit conductor&quot; in the NEC) does not include a water heater and so grounding your water heater that way is a code violation.
As you recognized the safety of those circuits that were legal to be installed that way is compromised, so much so that new circuits are not allowed to be wired that way. The exception applies only to existing circuits, the exception allows you to not update the wiring when connecting a new appliance or replacing a damaged receptacle.
Additionally connecting the water heater to the range circuit will not satisfy the overcurrent protection required for the water heater and is another violation of the NEC.

250.140 Frames of Ranges and Clothes Dryers. Frames of electric ranges, wall-mounted ovens, counter-mounted cooking units, clothes dryers, and outlet or junction boxes that are part of the circuit for these appliances shall be connected to the ground (equipment grounding conductor) in the manner specified by 250.134 or 250.138.
Exception: For existing branch-circuit installations only where a ground (equipment grounding conductor) is not present in the outlet or junction box, the frames of electric ranges, wall-mounted ovens, counter-mounted cooking units, clothes dryers, and outlet or junction boxes that are part of the circuit for these appliances shall be permitted to be connected to the neutral* if all the following conditions are met.

(1) The supply circuit is 120/240-volt, single-phase, 3-wire; or 208Y/120-volt derived from a 3-phase, 4-wire, wye-connected system.

(2) The neutral* is not smaller than 10 AWG copper or 8 AWG aluminum.

(3) The neutral* is insulated, or the neutral* is uninsulated and part of a Type SE service-entrance cable and the branch circuit originates at the service panel (service equipment).

(4) Grounding contacts of receptacles furnished as part of the equipment are bonded to the equipment.



* NEC's legal term for Neutral is &quot;grounded conductor&quot;, which is very confusing. For clarity, it's been changed to &quot;neutral&quot; here.