This is exactly what I've been thinking, too. By all means "fine" VW with billions of dollars, but instead of actually taking those billions of dollars from them, force them to commit to a very strict plan of investing those billions into bringing EV cars to the market (but not hybrids - EVs!).
But they should also have audits every 6 months or so to make sure those money go where they're supposed to.
Well, VW has used this case to fire the old CEO, who was focused on "We don’t need EVs as long as we have our super-diesel" (due to personal involvement in the program), and the new plan of them is creating their building block program for EVs, too.
They already have 2 EVs in their lineup (the up! and the Golf!), but they plan to provide every vehicle as EV in the future.
Just out of economic reasons this is going to be the only way forward for them.
Still, what is the benefit of driving a company into bankruptcy while the actual responsible have left with a golden parachute? The only thing that works is to go after all responsible managers. The Sabanes-Oxley act was a start, perhaps it needs to be extended. And I do like the idea of rather forcing the company to invest in making up for their wrongdoing than plain fines which vanish in some budget.
The only trouble there is that what if a company wants to (for instance) invest in EVs anyway? Now the incentive is to first make a quick buck cheating and lying, and then when they get caught the punishment is to do the same thing they were planning to eventually do anyway.
But they should also have audits every 6 months or so to make sure those money go where they're supposed to.