Zack is thrilled for two reasons. First, because they're about to start Driver's Ed. Second, because he's bought a friendship ring for Kelly, which she happily accepts.
Driver's Ed starts, taught by Mr. Tuttle. Slater quickly turns out to be the best student in class, mainly because his father has already taught him driving at the Army base. Zack feels very threatened by all the praise being heaped upon Slater. Soon it gets worse, as it turns out that Slater has bought a car. At first Zack laughs it off, as the car looks to be little more than a piece of junk, but it's quickly fixed up into a beautiful automobile. Zack's only consolation is that it'll be months before any of them get their licenses, but then he finds out that Slater will be 16-years-old next week, and eligible for his license. Zack imagines Slater and Kelly enjoying themselves at a drive-in, sitting in Slater's beautiful car, while Zack and Screech are stuck on a bicycle. He begins scheming.
Zack puts it in Mr. Tuttle's head that Slater is just a show-off who doesn't even think he needs to be taught by the teacher. At first Mr. Tuttle doesn't buy it, but is soon convinced. Mr. Tuttle is cold toward Slater in class, wanting to put him in his place, but once again respects him, as does the rest of the class, after he sees Slater perfectly drive the practice car. Zack cooks up another scheme, and asks Slater to held him learn to drive after school. After a $20 bribe, Slater agrees.
Zack has Screech call Mr. Belding, pretending to be Mr. Tuttle. Screech is to keep Mr. Belding on the phone for a few minutes, then ask him to get the keys out of the practice car. Meanwhile, Zack drives the practice car into the hallway. Slater is afraid that they'll get in trouble, but Zack assures him that no one is around. Of course, Zack's plan is for Slater to get caught driving the car, and be flunked out of Driver's Ed. Unfortunately, Kelly walks by, and Slater offers to drive her. Zack tries to stop them, and they wind up driving into a bank of lockers, and Kelly hits her head. Mr. Belding comes out to investigate the noise, and Zack, Slater, and Kelly run off.
The next day Mr. Belding demands that whoever was driving the car come forward, but Zack figures that he'll never be able to pin it on anyone. Slater and Kelly are prepared to come forward, but when they learn of Screech's involvement and figure out Zack's plan, they decide to teach him a lesson. Kelly pretends that the bump on her head has given her amnesia, and she doesn't even remember Zack. She even gives him back the friendship ring he earlier gave her. Zack feels guilty about this, and is about to admit what he's done to Mr. Belding when Kelly slips and calls him by name, revealing that she was just faking.
Mr. Belding comes into Driver's Ed, giving the students one last chance to confess. Zack still isn't worried, because he knows that they can't pin the blame on anyone, and therefore Mr. Belding won't be able to punish anyone. But Mr. Belding surprises him, and when no one steps forward he punishes the entire class by cancelling Driver's Ed until the next semester. Kelly comes forward, but Mr. Belding knows it wasn't her. Then, to his surprise, Slater admits that he was driving, and he should be punished. Finally Zack comes forward, and admits that the whole thing was his scheme. Mr. Belding gives Slater two weeks of detention, and flunks Zack at Driver's Ed. At the end Kelly has forgiven Zack, and wants the friendship ring back, and Mr. Belding takes him away to be punished.