Which one is correct to express the above picture?
"this car is made out of leaves"
"this car is made of leaves"
"this car is made from leaves"?
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All three are grammatically correct, with slightly different meaning. However, "leaves" isn't typically used to describe grass, so I will change it to say grass instead.
This car is made of grass tells us what the material in the car is.
This car is made out of grass means the same thing. It is considered better style to not include the word "out" because it isn't necessary.
This car is made from grass emphasizes how the car was made. It says the car's material was grass before it was used to make the car. It's correct, and it sounds natural even if the material does not change.
The difference can be demonstrated by an example: "Bread is made from wheat" is correct, because wheat is used to make flour, which is used to make bread. "Bread is made of wheat" is not correct, because the wheat was changed into something else when it was made into bread. (This is a minor difference, and people will understand you if you use the wrong one.)