delete term from taxonomy and assign in new one

wp_update_term() doesn’t changes taxonomy. It just updated the existing taxonomy. Say the below code-

$update = wp_update_term( 1, 'category', array(
    'name' => 'Uncategorized Renamed',
    'slug' => 'uncategorized-renamed'
) );

if ( ! is_wp_error( $update ) ) {
    echo 'Success!';
}

This code finds the category which ID is 1, then updates it to the name and slug passed by as a parameter. In the context of my system the category with ID 1 is Uncategorized. So it will rename it.

For changing terms taxonomy there is no default function. Here I’ve written one for you. Take a look below-

function the_dramatist_change_terms_taxonomy( $term_id, $future_taxonomy ){
    global $wpdb;
    $update = $wpdb->update(
        $wpdb->prefix . 'term_taxonomy',
        [ 'taxonomy' => $future_taxonomy ],
        [ 'term_taxonomy_id' => $term_id ],
        [ '%s' ],
        [ '%d' ]
    );
    return $update;
}

Here $term_id is the term’s ID which you taxonomy you wanna change and $future_taxonomy is the terms future taxonomy. $future_taxonomy must have to be string like 'category', 'post_tag' or 'vehicle_interior_feature'. It actually updates the database value directly. So be careful before you use it. Specially careful if your term has any parent. Cause it is basically updating the taxonomy value at wp_terms_taxonomy table, not any other one. For updating terms taxonomy I’ve not found any better option.

Hope this code help you.