Ballard Strengthens Relationship with EBARA and Simplifies Alliance

    VANCOUVER, B.C.--Oct. 1, 2001--Ballard Power Systems ("Ballard") announced today that it has signed a Memorandum of Understanding ("MOU") with EBARA Corporation ("EBARA") to enhance their strategic relationship and simplify their stationary power alliance.
    Under the MOU, Ballard will acquire EBARA's interest in Ballard Generation Systems (BGS), Ballard's stationary power products subsidiary. The MOU is consistent with Ballard's plans to enhance its ownership of BGS and streamline the development of Ballard's commercial stationary power generators.
    Ballard will purchase EBARA's interest in BGS for US$35.8 million, through the issue of Ballard's common shares (based on the 10-day average closing price of Ballard's shares on NASDAQ, ending three days before closing). EBARA has agreed to not sell the Ballard common shares for a period of four years. The transaction is expected to close in November 2001, subject to the completion of formal documentation and regulatory approvals.
    The acquisition of EBARA's interest in BGS is part of Ballard's strategy to simplify its corporate and operational structure and enhance its ability to leverage product development investments across markets. This will enhance the development of commercial stationary fuel cell generators.
    EBARA's and BGS's jointly held company, EBARA BALLARD Corporation (EBC) based in Japan, will continue to be owned as to 51 percent by EBARA and 49 percent by BGS. However, its development activities will be enhanced and more fully integrated with BGS's activities. EBARA BALLARD has exclusive manufacturing and distribution rights for Ballard's fuel cell stationary power generators in Japan. EBC is developing distributed power generation products for both residential and commercial consumers and anticipates launching its first product in 2004.
    "EBARA is a key strategic partner for the commercialization of our stationary power generators. Enhancing our relationship with EBARA allows us to work together more efficiently to bring products to market," said Jim Kirsch, President of Ballard Generation Systems. "It also reflects that Ballard and EBARA have expanded their relationship beyond stationary power generators to include co-operation on the development of components for fuel cells and fuel cell systems."
    "We see PEM fuel cells revolutionizing power generation in the coming years and Ballard and EBARA being identified with that revolution," said Mr. Hiroyuki Fujimura, Chairman of EBARA. "Our ability to work together will be strengthened by the enhanced relationship we are putting in place today. We see EBARA BALLARD becoming the pre-eminent fuel cell power generator manufacturer in Japan."
    "We are always looking at ways to simplify our business and enhance our ability to bring commercial products to market," said Firoz Rasul, Ballard Power Systems' Chairman and Chief Executive Officer. "While we execute on our plan to simplify our stationary power alliance, we have been able to strengthen our relationship with EBARA and enhance EBARA BALLARD and our stationary power business."

    BGS was formed in 1996 to commercialize PEM fuel cell stationary power generators that use the BALLARD(R) fuel cell. Following this transaction, Ballard Power Systems will own 81.6 percent of BGS. The remaining shares of BGS are held by ALSTOM France S.A.

    EBARA Corporation is globally recognized as a major developer, manufacturer and distributor of fluid machinery and systems, precision machinery and environmental engineering systems and as a leader in zero-emission energy technology.

    Ballard Power Systems is recognised as the world leader in developing, manufacturing and marketing zero-emission proton exchange membrane ("PEM") fuel cells for use in transportation, electricity generation and portable power products. Ballard Power Systems' proprietary fuel cell technology is enabling automobile, electrical equipment and portable power product manufacturers to develop environmentally clean products for sale. The fundamental component of these end-user products is the BALLARD(R) fuel cell that combines hydrogen (which can be obtained from methanol, natural gas, petroleum or renewable sources) and oxygen (from air) without combustion to generate electricity. Ballard is partnering with strong, world-leading companies, including DaimlerChrysler, Ford, ALSTOM and EBARA, to commercialise BALLARD(R) fuel cells. Ballard has also supplied fuel cells to Honda, Nissan, Volkswagen, Yamaha, Cinergy, Coleman Powermate and Matsushita Electric Works, among others.

    This release contains forward-looking statements reflecting Ballard's current expectations as contemplated under the Safe Harbor provisions of the US Private Securities Litigation Reform Law of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including, without limitation, product development delays, changing environmental regulations, the ability to attract and retain business partners, future levels of government funding, competition from other fuel cell manufacturers, competition from other advanced power technologies, competition from existing power technologies, evolving markets for generating electricity and power for transportation vehicles, and the ability to provide the capital required for product development, operations and marketing. These factors should be considered carefully and readers should not place undue reliance on Ballard's forward-looking statements. Investors are encouraged to review the section titled "Operating Results, Capital Requirements and Risks" (pages 41 to 46) in the Management's Discussion and Analysis section of Ballard's 2000 Annual Report for a more complete discussion of factors that could affect Ballard's future performance.

    EBARA's Common shares are listed on the Nikkei exchange under the trading symbol "EBARA".

    Ballard's Common shares are listed on The Toronto Stock Exchange under the trading symbol "BLD" and on the Nasdaq National Market System under the symbol "BLDP." Ballard, the Ballard logo and Power to Change the World are registered trademarks of Ballard Power Systems Inc.