Ferdinand Porsche saw the potential of an amphibious version of the VW Kübelwagen (type82).
The German Army was searching for a vehicle which could perform in difficult conditions such as snow, sand, mud. He combined these qualities and added all-wheel drive which had been developed at about the same time for the VW (type87). The development project was called the type 128 which appeared in 1940.
By the end of September 1940 the prototypes were tested in the lake called Max-Eyth near Stuttgart.
You can select 2 or 4 wheel driving in the type 128. The car had a gearbox with 4 gears and with 2 sperrdifferentials and a powertransmission to the front wheels.
Professor Porsche thought that the type 128 was too large and so unstable. Porsche started to create a smaller Schwimmwagen, which resulted in the project: type 166.
The first 125 vehicles were produced by the Porsche Team and they were hand-made in Stuttgart. These cars are also known as "Vorserienschwimmwagen" or preseries Schwimmers. It's difficult to confirm but it is said that in World War 2 the Schwimmwagen had lifespan of only 6 weeks.