Energy can change from one form to another but the amount of energy in a system remains the same. Based on this law, we can explain how energy transformations occur in a toy car.

The battery has potential energy because it is contains stored chemical energy. This energy can be transformed into an electrical current which is transformed into the mechanical energy used to propel the toy car once the circuit is completed.

When the wires from the battery connect to the battery leads in the motor, it will cause the axle to spin. This is called mechanical energy. This energy can be transferred to the wheels to become kinetic energy or energy of motion. However, much of the energy is converted to heat or thermal energy due to friction as parts rub together. For example, there is friction between the wheels and the ground as well as friction of the moving parts inside the motor.

I have included a link with a review of various energy transformations.