The Hyundai driver lost control 10 kilometres into the Ibarrilla test and speared into a bank. The force of the impact flicked the car around, before rear-ending a telegraph pole as it came to a halt in the road.
Lappi and co-driver Janne Ferm emerged from their heavily damaged machine unscathed before smoke began to pour from the front end as a small fire ignited. The telegraph pole was left hanging precariously above the car following the impact.
The stage was quickly brought to a halt under red flag conditions, while Lappi and Ferm attempted to put the fire out.
WRC2 leader Gus Greensmith was first to arrive at the scene of the accident. He and co-driver Jonas Andersson grabbed the extinguisher from their Toksport Skoda Fabia to help extinguish the fire.
The accident came after Lappi had hailed a Friday display that had given him a 5.3s advantage over Toyota’s Sebastien Ogier as one the best days of his WRC career.
The crash means Ogier has inherited the Rally Mexico lead, which now stands at 27.3s over team-mate Elfyn Evans.
Upon hearing the news of Lappi’s crash, Ogier said: "That's a shame. I always enjoy the fight and yesterday he was really having amazing speed, so it's a big shame."
Lappi was the last Rally1 car to enter stage 11, which was won by Ogier as a result of the crash. Ogier emerged 2.5s faster than Evans, with Hyundai’s Thierry Neuville third fastest, 4.4s adrift.
M-Sport’s Ott Tanak clocked the fourth fastest time after reporting the issues that afflicted his M-Sport Ford Puma on Friday had now been resolved, although the Estonian was still struggling for outright pace.
"Yesterday afternoon's issue seems to be fixed, but I can't drive the car fast at the moment," said Tanak, who lost 12 minutes to a turbo failure on Friday morning.
"It's not working for me and I am really struggling, but okay, we will try to learn."
Lappi’s exit has promoted Neuville to third overall, with world champion Kalle Rovanpera fourth.
