France finance minister Bruno Le Maire says Carlos Ghosn should not remain in charge of Renault following his arrest in Japan over claims of “misconduct”.
Le Maire said Mr Ghosn was “no longer in a position” to lead the carmaker in which the French state has a 15 percent stake.
The Renault board is expected to meet on Tuesday to discuss temporarily replacing Mr Ghosn as chief executive.
Renault shares fell a further 4 percent on Tuesday, after dropping 8 percent on Monday.
Renault’s partnership with Nissan remained in the interests of both France and Japan and of both companies, Mr Le Maire added.
Mr Ghosn leads an alliance that includes the two carmakers as well as Mitsubishi Motors.
On Monday, Japanese prosecutors said Mr Ghosn had under-reported his income from his role at Nissan by 5bn yen ($44.4m; £34.5m) over five years.
Japanese broadcaster NHK also reported that Nissan had spent millions buying luxury homes for Mr Ghosn.
Nissan and Mitsubishi are both preparing to remove him from his posts.
Shares in the companies fell 5.5 percent and 6.8 percent respectively in Tokyo.
In a press conference on Monday, Nissan said an internal investigation prompted by a whistle blower had revealed “significant acts of misconduct” including “personal use of company assets”.
The announcement sent shockwaves through the automotive industry where Mr Ghosn (64) is seen as a titan, responsible for a dramatic turnaround at Nissan in the early 2000s.
Nissan chief executive Hiroto Saikawa said “too much authority was given to one person in terms of governance”.
Prosecutors later said in a statement that Mr Ghosn and senior executive Greg Kelly had conspired to understate Mr Ghosn’s compensation, starting in 2010.
Mr Ghosn is accused of filing annual securities reports containing fake statements, which could mean up to 10 years in prison, or a fine of 10m yen, or both.