Takumi quickly notices that he was pushing his engine's RPM to it's limits, which then promptly leads to the engine blowing. Takumi blows up his engine at 12k rpm Takumi's car is forced into a spin and Shinji also spins out after attempting to avoid colliding with Takumi.
What episode does Takumi blow engine?
Episode Guide
Goodbye Eight-Six (さようならハチロク, Sayōnara hachiroku) is the sixth Act of Initial D: Second Stage. This episode features the second half of the battle between Takumi Fujiwara and Kyoichi Sudo. This battle is also Takumi's first loss, though it is uncounted as Sudo never considered it a proper race.
What is Takumi's new engine?
Replacement. Masashi Suzuki replaces the destroyed engine with a 1.6 litre, 20 valve Silvertop 4A-GEU (carbureted with dry sump oiling system in the manga) that Bunta Fujiwara had sourced.