"The ship is burning from one end to the other... everything is on fire about five meters above the water line," Cabeças said.
Towing boats were on route from Gibraltar and the Netherlands, with three due to arrive by Wednesday, Cabecas said. He added the vessel could not be towed to the Azores because it was so big it would block trade at the port.
U.S. economist Patrick Anderson estimated the initial loss could be $255 million.
"A quick estimate, assuming that the ship was only partially full (or that a portion of the cargo is salvaged undamaged), is that there is at least $255 million or more in lost vehicles, plus many millions in salvage costs on top of that, and downstream losses in auto dealerships. It could be more," Anderson said in an emailed statement on Friday.
A 16-person salvage team from Smit Salvage, owned by Dutch marine engineer Boskalis, was sent to the ship to help control the flames, Boskalis said.
The Panama-flagged ship, owned by Snowscape Car Carriers SA and managed by Mitsui O.S.K. Lines Ltd., was travelling from Emden, Germany -- where Volkswagen has a factory -- to Davisville, R.I., based on the Maritime Traffic website. Davisville is a port about 70 miles south of Boston.
The 22 crew members on board were evacuated on Wednesday, when the fire broke out, with no one hurt, Portugal's navy said in a statement.
Around 1,100 Porsches and 189 Bentleys were on board, spokespeople for the car brands said. Audi, another Volkswagen brand, confirmed some of its vehicles were also on the ship but did not state how many.
An internal email from Volkswagen’s U.S. operations revealed there were 3,965 Volkswagen Group vehicles aboard the ship.
More than 100 of those cars were headed for the Port of Houston in Texas, with GTI, Golf R, and ID.4 models deemed to be at risk, according to the email. The auto industry is already struggling with supply issues, including pandemic-related staffing woes and the global chip shortage.
YouTuber Matt Farah, whose automotive review channel "The Smoking Tire" has more than a million followers, said on Twitter he was contacted by a car dealer who said the Porsche he ordered was aboard the ship.
"My car is now adrift, possibly on fire, in the middle of the ocean," Farah tweeted.