Does all energy of moving car converts to thermal energy? I argue with my friend and cannot say that he is wrong although I feel it somehow. But I don't have good arguments against him. I want to know who is right and why.
The problem is
Let's imagine we have a car and we put fuel in equivalent of A joules of energy.
We drive this car until the fuel is over and drive until the car stops (of we put on brakes and stop it).
So my friend says that all (100%) this A joles of energy will be converted into thermal power (temperature energy, heat energy) either when engine works or when we gain some kinetic energy and after we're trying to stop all kinetic energy converts to heat energy. He says because of conservation of energy theorem and because of type of energy eventually in this case converted to heat (when you run engine, when you try to use stop force etc). 
So his assumption:
100% of our fuel energy equivalent will be eventually one way or another converted into thermal energy.
I guess this not correct, I feel there is some work / activity is done and not all fuel energy converted into heat through this driving process.
Am I correct or all energy of fuel converts to heat energy. And why? Please explain, thanks.
 A: 
I guess this not correct

It's not, but it's pretty close to correct. A tiny bit will be turned into sound, there are also more minor mechanical losses like wear on the brake pads and tires. But yeah, the vast majority ultimately turns into heat.
And that's largely due to one very simple fact: of the energy in the fuel you put into the car, something like 99.9% of that is literally turned into heat when you burn it (there's some tiny losses out the tailpipe and others). Of that 99.9, only about 15 to 30% of it turns into motion. The rest is heat lost through the radiator, the top of the engine, or the tailpipe.
Yes, cars waste that much energy. So even if the rest didn't turn into heat, you're probably about 85% of the way there already.
As to the rest, most of it ultimately warms up the air you drive through, a smaller amount warms up the tires, and depending on what sort of driving you're doing, the brakes.
A: This is an interesting question, and I wouldn't necessarily call your friend wrong; though there are definitely many caveats.
So for starters, one thing your friend seems to have not considered is that you can use a car to change your potential energy.  If you spend that fuel to move the car somewhere of a higher elevation, you've increased your potential energy as well, so not all of the fuel spent in that case goes towards heating.  You also may displace some rocks or dirt into a higher potential energy as you drive by; which would be more energy that doesn't go into heat.
You could also possibly say that your effect on the surrounding air is not exactly thermal energy.  The car provides some kinetic energy to the air as it is displaced; this will depend highly on shape.  The issue with that is that it's hard to really track that additional kinetic energy in the air, and will just result in a small amount of heating when all is said and done.
Which brings me to the major thing I wanted to point out; which is the reason why I wouldn't necessarily call your friend wrong.  Assuming the laws of thermodynamics absolutely hold (specifically the second law), then it is theorized that at some point we may reach the heat death of the universe.  This in a way could be considered as everything converted into a thermal equilibrium; where no more work could be done, and all the energy is "thermal"; or random.  In the absolute timescale of the universe, your friend might be correct, according to some proposed models.
