Need help identifying a cut/chewed wire

[caffaro]

Hi everyone. After leaving my car parked outside my house while out of the country for two months, I found my poor Yaris with a few problems. Namely:

1) The speedometer does not work
2) The P/S warning light is on and the EPS does not appear to be working (steering wheel is very stiff, difficult to turn at low speeds)
3) Malfunction indicator lamp showing

I tested my battery and discovered it was in low health, so went ahead and replaced it. This took care of the malfunction warning, but not the other problems.

As I go to double check the battery is secured, I notice a glaring issue --- a cut wire (hopefully chewed by a rodent and not cut by a person).

https://imgur.com/a/6ejrett

I have a decent knowledge of engines and DIY maintenance, but am completely ignorant when it comes to electronics and wiring. I also have no clue what the cylindrical component is that the wire is leading to.

So my questions are:
1) What is this wire? Is it possible that this wire is somehow connecting the VSS to the ECU? I kind of doubt it, since it isn't feeding directly into the ECU, but I have no idea where the VSS is actually located.
2) I'm not entirely clear how the EPS functions, but is it possible that a bad VSS would be causing the EPS to shut down and/or go into failsafe mode?

I am really, really hoping that fixing this snapped wire will resolve my issues. I still don't have a trusted mechanic in this area. Dude who did some (mediocre) work for me a few years ago told me he wouldn't touch it and suggested I take it to the dealership. I've got an appointment tomorrow, but I'm a bit terrified they're going to tell me something crazy, like that they want to replace the entire harness.

Anyway, any thoughts or info is very appreciated. Cheers!