Electrosource Responds to Chrysler Announcement

11 December 1997

           Company Reaffirms Business Strategy for 1998 and Beyond

    SAN MARCOS, Texas, Dec. 11 -- Electrosource, Inc.
today responded to news that Chrysler Corporation
will offer another vendor's batteries in its Electric Powered Interurban
Commuter (EPIC) minivan in the fall of 1998 for the 1999 model year.  Earlier
this year, Chrysler sold EPICs powered by Electrosource HORIZON(R) C2M
(co-extruded composite matrix) batteries to fleet customers in California.
    Chrysler informed the company that it will continue with plans to order a
number of Electrosource battery packs for development and field service
requirements.  Chrysler also said it intends to continue with development
efforts with Electrosource.
    Electrosource Chairman, President and CEO, Michael G. Semmens, said, "Two
years ago when California changed its electric vehicle mandates we realized
that the electric vehicle (EV) market in the U.S. was uncertain.  At that time
we aggressively diversified the company's efforts to explore and develop
emerging market opportunities throughout the world.  While we are disappointed
in this latest revision by Chrysler, we are pleased with the results of our
efforts to diversify into new markets with customers and business partners
such as Lockheed Martin, Fiat Auto, SMH Automobile, and Corning, Inc. and the
resultant change in our revenue mix as project revenues in particular have
increased over 900% for the first nine months as compared to 1996."
    Electrosource reported that its business plan will continue to focus on
diversified market opportunities for its high power, high energy, long life
battery technology.  Electrosource provides production batteries for Lockheed
Martin's HybriDrive(TM), used in hybrid-electric Navistar trucks and Orion
heavy-duty transit buses.  Also, the company is developing products for
airplane and helicopter starting, electric lawnmowers, electric buses, and
small electric and hybrid-electric cars.  Electrosource and Corning, Inc.,
signed a technical development agreement involving research and development of
technologies, designs, and manufacture of HORIZON C2M batteries.
    Electrosource, headquartered in San Marcos, Texas, designs, manufactures
and markets proprietary advanced energy storage technologies and systems.
Additional information about the company is located on the Internet at
http://www.electrosource.com.
    This release contains forward-looking statements regarding sales that
involve risks and uncertainties.  Actual results could differ materially from
those discussed in this release.  Risks, including manufacturing risks, risks
of uncertainty of market acceptance, change in government mandates requiring
electric vehicles, delay in shipment or cancellation of orders, customer
reorganization, as well as others, are detailed from time to time in the
Company's Securities and Exchange Commission filings.

SOURCE  Electrosource, Inc.