The stock has tanked because there are two possible outcomes:
1. A very public and expensive recall where they overhaul the emissions system and retain the advertised performance on 11,000,000 vehicles
2. A very public and inexpensive recall where they patch the ECU to keep the emissions systems active at all times, reducing performance, and opening themselves to a massive class action lawsuit over truth in advertising (engine not capable of advertised performance anymore) from 11,000,000 customers.
Either way, this is very public, and very expensive for VW. Also, auto manufacturers trade on their brand, and brand is built through trust. They just got caught lying and cheating, which is the fastest way to destroy trust there is.