The problem was and still is "dieselgate." It cost VW $42bln, and that money had to come from somewhere. They became too scared and started to make short-term decisions that now have serious financial effects.
1. They stopped investing in ICE. They were under the impression that EVs are coming super fast and that ICE is pretty much dead. EVs are on the decline in Europe and elsewhere (not China), and while the future is definitely EV, it will be some time. Trends and "coolnes" won't win the day. It needs to be a generational change. BMW 5 years ago said that their plan was to keep ICE until 2050, and that was at the time when everyone thought EVs would rule the roads in 2025. EU policy will change. There is too much economic instability created by Euro norms, and if the union wants to survive, they will have to start making compromises. WHile Europeans are more aware of climate change than here, going EV too fast will kill jobs super fast while not allowing other industries to absorb that workforce. Between climate change and paycheck, people will choose paycheck. It is really not that difficult choice.
2. They are the victim of dumb German energy policy. Clean at home, dirty beyond borders. Cheap Russian gas and belief that they can change Russia (because of arrogance, ego, hubris).
3. They panicked and started to make dumb decisions. Cheapened products (they ruined Audi). They have hybrid products in EU but they did not bring them to the US. The biggest mistake with Atlas was not that they put VR6, but that they did not put EA390 2.5 VR6 turbo DDPK and DDKA engine in American Atlas. 2.5 VR6 was tuned for 299hp and 369lb-ft of torque. We got an EA390 3.6ltr VR6 that was the thirsty engine in 2007, let alone in 2018. I drove that engine numerous times, checking it when I was on the market for Atlas, and I found that the 2.0T was far better suited here at altitude. If they went with a 2.5 VR6, they would have something unique, something for VW enthusiasts that want a bit more, because Atlas as a vehicle is, IMO the best family SUV when it comes to practicality. However, I think the issue I had with it (windshield cracking) is a consequence of this panic and creating a product too fast to fill the void in the market.
VW will survive, but the question is what is that going to look like? Oh and by the way, they just cut 35,000 jobs.