Imagine a ball ($m= 1\,{\rm kg}$) moving at a velocity $2\,{\rm m}/{\rm s}$ towards a wall. When it hits the wall, it suddenly stops, thereby liberating all its ${\rm KE}$ as heat. Here, the initial kinetic energy, ${\rm KE}\_I = (1/2)mv^2 = 2\,{\rm J}$, and final ${\rm KE}$ is obviously zero. So heat liberated (${\rm KE}\_F - {\rm KE}\_I$) equals $2\,{\rm J}$.

Now, suppose I hop on a car moving at $2\, {\rm m}/{\rm s}$ towards the oncoming ball from the direction of the wall. So for me, the ball is initially moving at $4\, {\rm m}/{\rm s}$, and after impact, it is moving at $2\, {\rm m}/{\rm s}$ (relative velocity). In this case, the ${\rm KE}\_I=8\,{\rm J}$, and the ${\rm KE}\_F=2\,{\rm J}$. In this case the heat liberated (${\rm KE}\_F - {\rm KE}\_I$, due to conservation of energy) equals $6\,{\rm J}$. 

So, is this observation correct? If it is, then how does it make any sense? And if not, then what is wrong with the above approach?