Energy Conversion Devices Implements Major Initiatives to Reduce Cost and Increase Revenue

Company cites need to accelerate commercialization of its products and technologies

ROCHESTER HILLS, Mich., July 31 -- Energy Conversion Devices, Inc. today announced a series of initiatives aimed at aggressively continuing to grow revenue through increased photovoltaic production and sales, continued expansion of NiMH battery manufacturing capability and expected growth in solid hydrogen storage systems while significantly reducing operating costs. The Company continues to have discussions and negotiations with potential strategic partners to increase the funding available to develop emerging technologies such as fuel cells and information products which are gaining worldwide recognition.

With the uncertainties surrounding both the national and worldwide economies, and the need to maximize resources for accelerated commercialization of its products and technologies, ECD business units are analyzing every means of reducing costs. Workforce reallocation and reductions of up to 20% are being implemented to meet the company's aggressive cost reduction targets, and business units will also reduce discretionary spending and other costs associated with the company's operations. Cost reduction initiatives will also include salary freezes, attrition, and reduced purchased services and contract employees. The cost containment initiatives will start immediately and should be fully implemented by Jan. 1, 2004. In aggregate, they are expected to save the company from $19,000,000 to $25,000,000 annually.

"Our decision to reduce our workforce is a very difficult one," said Stanford R. Ovshinsky, president and CEO of ECD Ovonics. "Building our company has always been about solving problems. We have made important advances in all areas of our work and are aggressively focusing on the commercialization of our technologies. Despite our very important work and increasing interest in our successful enabling technologies, like many others in the current economic environment, it is imperative that we reduce costs. At the same time, we intend to grow revenue and, of course, to maintain our leadership position in innovative technologies, manufacturing and products. Energy and information are the basic pillars of our global economy. We have a very strong leadership position that enhances our shareholder value." He further noted that ECD's Rare Earth Ovonic joint venture has begun production in a rapidly growing market for NiMH batteries in China and that ECD's joint venture in Russia, Sovlux Battery, has recently reported very significant progress in its commercialization activities.

"ECD Ovonics, along with its joint ventures and subsidiaries, will continue to concentrate on our strong brand portfolio of Ovonic products and technologies with the greatest potential for increasing shareholder value," Robert C. Stempel, Chairman, said. "The new leadership in our photovoltaic sales and the newly formed Ovonic Integrated Solutions group are examples of ECD Ovonics' commitment to increase commercialization of its products and to the continued growth and long-term success of the company."

Commenting on the cost-containment initiatives, James R. Metzger, ECD Ovonics vice chairman and chief operating officer, said, "We continue to explore all possible ways to realign our organization to reflect our current business needs and accelerate commercialization. We are balancing our cost structure with the opportunity to grow revenue in focused areas."

About ECD Ovonics

ECD Ovonics is the leader in the synthesis of new materials and the development of advanced production technology and innovative products. It has invented, pioneered and developed enabling technologies leading to new products and production processes based on amorphous, disordered and related materials, with an emphasis on advanced information technologies and alternative energy, including photovoltaics, fuel cells, hydride batteries and hydride storage materials capable of storing hydrogen in the solid state for use as a feedstock for fuel cells or internal combustion engines or as an enhancement or replacement for any type of hydrocarbon fuel. ECD Ovonics designs and builds manufacturing machinery that incorporates its proprietary production processes, maintains ongoing research and development programs to continually improve its products and develops new applications for its technologies. ECD Ovonics holds the basic patents in its fields. ECD Ovonics' website address is http://www.ovonic.com/ .

This release may contain forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on assumptions which ECD, as of the date of this release, believes to be reasonable and appropriate. ECD cautions, however, that the actual facts and conditions that may exist in the future could vary materially from the assumed facts and conditions upon which such forward-looking statements are based.