The shares have lost about a quarter of their value since Russian President Vladimir Putin's invasion began and credit rating company Fitch has warned the company's turnaround could be derailed.
Since the start of the war on Ukraine, the French government has made few public statements about Renault.
Finance Minister Bruno Le Maire has said private companies are free to make their own decisions on whether to keep doing business with Russia as long as they “strictly and rigorously adhere to sanctions.”
The company could book a 1 billion-euro provision this year on AvtoVAZ, which could post an operating loss in 2022, Alphavalue analyst Jorge Velandia wrote in a note Thursday.
The research firm downgraded its recommendation on shares, saying it saw a “low likelihood” of Renault exiting its stake in the venture as global investors shun Russian assets.
The value of the venture has fallen to zero “to account for the geopolitical risk regarding Russia's invasion of Ukraine and the long-lasting implications that Western sanctions could have on the Russian economy, possibly drastically reducing car demand in the country for years to come,” Alphavalue said.
In the first explicit response to the exodus of foreign businesses from Ikea to McDonald's, the Russian Economy Ministry has outlined new policies to take temporary control of departing companies where foreign ownership exceeds 25 percent.
Renault has temporarily halted its assembly plant near Moscow until March 18 on difficulties getting supplies. Two other factories operated by AvtoVaz at Togliatti and Izhevsk also shut down for some days this week due to “the ongoing crisis in the supply of electric components,” the venture said in a statement.
AvtoVAZ's other partner, Rostec State, a Russian government-owned defense conglomerate, is headed by Sergey Chemezov, a close Putin ally who is on the U.S. list of sanctioned individuals.
In a report published this week by Russian news agency Tass, he was quoted as saying Russia has already proved under past sanctions from the 2014 invasion of Crimea that it can develop its own production and will again emerge a winner.