You can set format associations in VSCode, so .erb files would be treated like .html.
Go to File->Preferences->Settings->Click ... in top right corner->Open settings.json
Then add this piece of code to your settings.json
"files.associations": {
"*.html.erb": "html"
}
This is how I solved this problem. It will remove some of the code highlights but will autoformat HTML templates like an HTML document.
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