Given new information about the existence of werewolves, the Sheriff reevaluates the case and thinks that the car crash may have been caused by a Werewolf and Malia either killed by one or turned.
Scott finds an unfamiliar shapeshifter, a werecoyote, in the woods by the crash with eyes that glow blue. It turns out to be Malia. Scott surmises that she turned in the car on the night of the full moon, causing the car crash. It's unclear whether he thinks she suffered from the same bloodlust that a werewolf suffers from and would have mauled her family.
Malia stayed shifted as a full coyote for eight years. Scott is able to use the force of an alpha roar to shift her back into a human so she can be reunited with her father.
It is unclear whether her father has been told that Malia is a werecoyote.
In 3x19 - Letharia Vulpina, Lydia learns from Talia's claws that Malia is Peter's daughter. It is not explained why Talia would have stolen that memory, aside from Peter being a psychopath, given the timing of the car crash (2003) and the Hale House fire (2005).
After being rescued from her coyote form, Malia was put into Eichen House. Siles finds her there when he checks himself in in 3x20 - Echo House.