VW realized that to pursue the TDI development was a waste of time as cities like Paris, Berlin and many others were simply never going to let them in the city again as they are trying to reduce smog using every means available. This isn't about green house gases, this is about pollution. The exhaust systems alone were going to be north of 11,000 dollars and thats if they could get them to work. Even if the USA dismantles the EPA some cities like LA will be looking so close at them that it just won't be worth it to try and make it work.
I would expect VW to be putting all of its efforts into developing a full line of electric vehicles, no chance of rejection in any market. Give em a couple years, they'll bounce back....maybe. It will be interesting to see how they will compete with the technology companies offerings in the next 4 years. Google, apple and Uber are all releasing a car in the next 4 years, none of which will be sold through a dealer network.