How the 2 speeds shift:
The gears in the 2 speed transmission use centrifical force to shift. So once you get going fast enough they'll automatically shift into second. When you slow back down first will automatically kick back in. You'll know that it shifted because you'll hear the engines rpms drop just like in a real car. You can also adjust for the shift point, incase you want second to engage earlier or later.
The first picture is how the whole deal works. Baisically when you're running your car eventually you'll go fast enough to where the little arm swings up and then the tab on the second gear hits it and it becomes engaged. When you slow down the arm folds back down and the tab is no longer caught on it and then you'll be back in first gear.
The second picture is of the screws to adjust it.
ORIGINAL: chubbysuncle
loosen the set screw to engage earlier tighten for later. Too tight never shift, too loose falls out and gone! If you adjust this and take it out, DON'T LOSE THE SPRING AND LITTLE BALL!, and put blue loctite on it. It has to be at least flush with the clutch or else it'll catch on the 2nd gear engagement tab and lock the car in second. I think factory setting is about 1-2 turns in from flush. If you still get no shift to 2nd you'll need to remove the trans and clean and check all gears and clean out the clutch of sand grit etc. that may be in it. Also make sure the steel pin is in the 2nd gear clutch tab.
Thank chubbysuncle for that info . Gotta give credit where it's due
The third picture is from the bottom of the car just showing you where the screws are.
The last one is of the access hole in the top of the transmission.