(Adds source, analyst comments, detail, background, shares)
* Board committee grilling CEO Winterkorn over scandal
* Expected to make recommendation on his future
* Full board meeting scheduled for Friday
By Andreas Cremer
BERLIN, Sept 23 (Reuters) - Volkswagen Chief Executive Martin Winterkorn faces a reckoning with his board on Wednesday, summoned to explain the falsification of U.S. emissions tests in the biggest scandal in the 78-year history of the world's largest carmaker.
A source close to the company said a five-member executive committee was grilling Winterkorn at the company's headquarters in Wolfsburg, Germany, and was likely to make a recommendation on his future ahead of a full board meeting on Friday.
Volkswagen is under huge pressure to act, with its shares down more than a third in value since the crisis broke. German Chancellor Angela Merkel has called for it to move "as quickly as possible" to restore confidence in a company held up for generations as a paragon of German engineering excellence.
But the board is in a tricky situation, with the 68-year-old CEO showing no sign of resigning after a hitherto highly successful eight year reign, in which the company doubled its sales and almost tripled its profits.
"VW needs a fresh start and in our view a new CEO," said Evercore ISI analyst Arndt Ellinghorst.
A story in the Tagesspiegel newspaper, denied by Volkswagen, said the board would replace him with Matthias Mueller, head of the automaker's Porsche sports car business.
Winterkorn, who was due to have his contract extended at Friday's board meeting, did not mention his future in a video message posted on the company's website on Tuesday, in which he repeated his apology for a scandal which has wiped out tens of billions of dollars from the company's value.
The U.S. Environmental Protection Agency (EPA) said on Friday Volkswagen could face penalties of up to $18 billion for cheating emissions tests on some of its diesel cars.
The story has sent shockwaves through the car market, with dealers in the United States reporting people holding back from buying diesel cars and "#dieselgate" trending on Twitter.
The U.S. Justice Department has launched a criminal probe, a source familiar with the matter said. New York and other state attorneys general are also forming a group to investigate, New York Attorney General Eric Schneiderman said.
"No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods," Schneiderman said in a statement
Other countries in Europe and Asia have said they will also launch investigations into Volkswagens and other vehicles.