stick to your guns. If your son's attitude does not change, you can put even more consequences on his nasty behavior. This may continue until he's 18. Then you'll have to re-evaluate whether you have to live with his nastiness.
I assume the bio dad does not have custody. I'd do whatever i could to keep that car on my property with the keys in my possession and a steering wheel lock. If the bio dad and grandparents are not on the same page with you, stick to your guns anyway. Why in the world would somebody give a young male buck a fast car and then expect him not to drive fast in it??
Other than your actions, you cannot make someone see the gravity of the situation or accept responsibility. His responses sound immature for a 17-year-old (that's why I asked if he were using). Maybe he will think about it and come around in the next week or so. I suppose you could look around for ticketed drivers doing community work by giving talks about they had harmed someone (i don't know if that exists, i'm just thinking out loud here).