Finn McMissile, a British spy, infiltrates the world's largest untapped oil reserves owned by a group of lemon cars. After being discovered, he flees and fakes his death.
Lightning McQueen, now a 4-time Piston Cup champion, returns home to Radiator Springs to enjoy some quiet time, but when Italian formula race car, Francesco Bernoulli, challenges McQueen to the newly created World Grand Prix, led by its creator Sir Miles Axlerod, he and his best friend Mater — along with Luigi, Guido, Fillmore, and Sarge — depart for Tokyo for the first race of the Grand Prix. Meanwhile, the lemons, who are led by weapons designer Professor Zündapp and an unknown mastermind, secretly plot to secure their oil profits by using an Electromagnetic pulse emitter disguised as a camera (discovered by Finn on the oil platform) to trigger and destabilize the use of Allinol, a fuel that was created by Axlerod and required for racers to use in the Grand Prix. McMissile and his partner Holley Shiftwell attempt to meet with American spy car Rod "Torque" Redline at a World Grand Prix promotional event in Tokyo, to receive information about the mastermind. However, Redline is attacked by Zündapp's henchmen, but not before passing his information to Mater before he is captured, who is then mistaken to be the American contact of Holley and Finn. Before killing Redline, Professor Zündapp finds out that Mater was given the information.
At the first race, three cars are ignited by the camera, and McQueen falls second in the race after Bernoulli, due to Mater accidentally giving him bad racing advice shortly after evading Zündapp's henchmen with help from Holley and Finn. Mater is soon abducted by Finn and boards his plane, where he helps to identify some of the information he was given. After traveling to Paris to get more information from Finn's old friend, they travel to Italy, where the next race is being held. While the race is being held, Mater infiltrates the criminals' meeting, just as the camera is used on a few more cars, causing a multi car pileup, while allowing McQueen to finish first. Due to the criminals plan causing Allinol to be perceived as troublesome, Sir Miles Axlerod removes it as a required fuel for the final race. However, when McQueen decides to continue using it, the criminals plot to kill McQueen in the next race in London, which spooks Mater, causing him to blow his cover and allow him, Finn and Holley, to be abducted.
Taken to the inside of the clock tower of Big Ben clock in London and tied up in it, while the final race is being held, Mater discovers that the camera did not function on McQueen, but quickly learns the criminals are planning to plant a bomb on him in his pits, causing him to break free and escape. Finn and Holley escape later, but realize that the bomb is on Mater's air filter. Mater soon flees on the race course when McQueen (who arrived at the pits) chases after him, while Finn apprehends Professor Zündapp. The other lemons soon arrive and outnumber Finn, Holley, Mater, and McQueen, but they are soon rescued by the arrival of the other Radiator Springs residents. Mater then uses evidence he had seen to reveal that Axlerod is the leader of this plot and placed the bomb on him, whom he soon confronts and forces to deactivate the bomb, before he and the other lemons are taken into custody, foiling the operation.
In the end, Mater receives a honorary knighthood from the queen, while Sarge reveals that he changed McQueen's fuel from Allinol to gasoline, hence why the camera did not work on him. Finn and Holley ask if Mater can join them on another mission, but he turns it down. The final scene ends with the World Grand Prix competitors racing each other at Radiator Springs.

Question: Why didn't the camera work on Lightening?
Answer: Because Sarge changed the fuel
Alternative answer: Sarge changed the fuel from Allinol to gasoline