Lower Saxony Premier Stephan Weil, the trustee for the state's 20 percent voting stake in its biggest employer, urged Volkswagen to be as transparent as possible when uncovering the facts.
"It is of great importance to me that the VW group of its own volition consistently comes forward to publicize the information it has secured," Weil said in a statement Thursday, Oct. 1. "I assume this will already be the case next week."
The carmaker declined to comment. VW said in a statement that it could take "several months at least" before wrapping up its internal probe, for which the board has hired U.S. law firm Jones Day to help with the investigations.
Analysts, meanwhile, are busy estimating the cost to the carmaker and its shareholders. Beyond the fine VW expects from the EPA, recall costs and likely class actions could drain the company of billions.
Owners of VW vehicles could face a potential loss stemming from lower resale values. Investors can argue that Volkswagen should have informed them of the scandal earlier so they could have sold shares before the stock tanked over 20 percent in the course of one day.
"In a base case scenario, it could easily end up costing Volkswagen 30 billion euros ($34 billion)," said Metzler Bank's Juergen Pieper.
One source said the new tandem of designated Chairman Hans Dieter Poetsch and Mueller, along with his new finance chief, Frank Witter, likely will review options logically and soberly, with no taboos.
"It's conceivable that everything could be put on the table," said the insider, now that longtime VW Supervisory Board Chairman Ferdinand Piech has left his position. Piech, who was ousted in April, was the architect of key acquisitions over the last several years.
"Mueller might review whether the trucks business should be spun off or sold," said the source. "Audi is already a publicly listed company on the stock exchange, so it could issue fresh shares in a secondary placement, for example.
"But let me stress, these are extreme scenarios and nothing concrete has even been discussed," he said. "It's still too early to say what this will cost in terms of legal risks. These types of lawsuits can drag on for years before a settlement is reached, so it's not as if a huge sum of money will be gone in one fell swoop."
A capital increase at Volkswagen, while possible, is also problematic. VW can issue as many as 114.5 million new preference shares before it hits its legal limit in Germany, where a company must have at least one ordinary share for every nonvoting share it issues. At current share prices, that would yield roughly $11.78 billion before the usual discount.
With Lower Saxony holding the minimum 20 percent it needs for a blocking minority, the state likely will veto any plans that would require it to stump up fresh cash, especially now that it is facing the loss of a dividend payment from Volkswagen.
Instead, the hope is that far more mundane measures can suffice. First off, the company can dip into its massive war chest that amounted to 21.5 billion euros at the end of June -- if need be, perhaps even go lower than the 10 billion euro threshold that the company is comfortable with in order to maintain its single A credit ratings.
If the business remains stable, it will continue to generate substantial cash. Volkswagen averaged 5.3 billion euros in free cash flow over the last two years and made 3.3 billion euros in the first half of this year.
Moreover, VW has topped up its funding in the past with so-called "perpetual" hybrid bonds, a unique class of debt that doesn't harm VW's credit rating. VW already has issued 7.5 billion euros of this kind of debt since September 2013 at coupons as low as 2.5 percent.
Pieper said: "A share sale in this environment (where the stock is under pressure) is probably Volkswagen's fifth most likely option behind using up cash reserves, generating fresh liquidity, issuing hybrid issues bonds and cutting costs. I'd say the chances are less than 50 percent."