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2002, AZG engine, 138K miles, new battery fuse panel, new battery, new alternator, No luck. First off, the car will start fine, then die sporadically (no lights, no power whatsoever). After the car dies, the car wont turn over; however, if I leave the key in the "on" position for a few seconds, BAM! the lights come back on and the car starts and runs fine. The car will die when I am driving and is very dangerous. Any ideas? Here's a video of my problem for better explanation: New beetle startup issue - YouTube

Please forgive me for recording vertically.
 

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Sounds like a bad ignition switch. Those are a common failure in these cars, however usually a different set of contacts from yours with less serious consequences.
 

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Discussion Starter #3
It scares me because the car's not shooting any codes. The dealership did an electrical test to no avail, they then wanted another $125 for a more thorough test which yielded no results. Then they had the audacity to tell me it would be another $300 to go even deeper! What is this? Inception?! I cut my losses and I'm starting to lose hope.
 

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Did you check connections at the battery? Make sure the ground is tight on the body.

Try wiggling the key while it is in "on" or better yet, take the column housing off and wiggle harness at ign switch.

Its almost like a circuit breaker is popping, cooling off and closing the circuit again. I don't know if vw uses a circuit breaker, fuse, or fusible link in that circuit.

If it is within your ability, locate a power distribution diagram and inspect connections and relays related to the issue you are having. GL
 

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One thing to check: when it goes into "dead" mode, does the light on the rear view mirror still work if you switch it on? If not, there is a problem with the power feed or grounding somehow. If it does work it is very likely to be the ignition switch.

A problem with the ignition switch won't produce any error codes. The error codes are primarily an emissions thing. They were mandated for emissions requirements and are primarily for things that will affect emissions.
 
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