Engine rebuilding is the act of modifying a car to usually remove parts or simply reset mileage. Mileage slowly degrades vehicle performance so having minimal mileage is important - particularly in PvP events. As of 10-28-2013, there is 3 different options in the game in regards to engine rebuilding.
Dirty Engine Rebuild
This is the simplest and cheapest(0 IP) reset. It basically resets the car HOWEVER it WILL destroy ALL PARTS attached. This is a great option if you have parts you don't care about or cars with no parts as it saves valuable IP.
Preserving Engine Rebuild
This option keeps parts and slot assignments on vehicles and resets mileage. It costs 1 IP. This is useful if you want to keep parts on a car but reset mileage(useful for season races). This is a vastly cheaper option IP-wise compared to the Recovery Engine Rebuild but does cost the most in-game money.
Recovery Engine Rebuild
This option is the ONLY way to move parts from a car to another car. It also does reset mileage. It is the most expensive rebuild(7IP) but costs the same in-game money as the Dirty Engine Rebuild. This option is useful if you want to move highly valued parts from one car to another.