Valence Delivers Samples of Second Generation Saphion Technology for Customer Evaluation

AUSTIN, Texas--Jan. 2, 20040, 2004--Valence Technology Inc. , a leader in the development and commercialization of Saphion(R) technology, the only safe large format Lithium-ion rechargeable battery technology, today announced that it has delivered samples of its second generation cylindrical Saphion Lithium-ion technology for customer evaluation.

A primary feature of second generation Saphion Lithium-ion technology is its high rate capability, required for power applications in the consumer and vehicular markets. The superior cycle and service life characteristics of Valence's first generation Saphion technology are needed for large format energy applications such as utility and telecom back-up power systems. The performance features specific to each generation of Valence's Saphion technology, combined with the safety characteristics offered by both, significantly expand the market opportunity for Lithium-ion technology.

"The recent publicity on safety issues related to traditional metal-oxide Lithium-ion technology has strengthened the position of our Saphion technology as the only safe large format Lithium-ion technology available today. As a result, the requests to evaluate it have increased over the past several months," stated Stephan Godevais, chairman and CEO of Valence Technology Inc. "Today's announcement is a significant step forward in the commercialization of our second generation Saphion technology, and we are very pleased with the progress we have made to date."

Valence launched its Saphion Lithium-ion technology in the spring of 2002 and has since commercialized it in applications such as the N-Charge(tm) and K-Charge(tm) Power Systems. Research and development of company products continues with great success, marked by this latest advancement and the manufacturing of cylindrical cells, which began in December 2003.

About Valence Technology Inc.

Valence is a leader in the development and commercialization of Saphion(R) technology, the only safe large format Lithium-ion rechargeable battery technology. Valence holds an extensive, worldwide portfolio of issued and pending patents relating to its Saphion(R) technology and Lithium-ion rechargeable batteries. The company has facilities in Austin, Texas, Henderson, Nev., and Mallusk, Northern Ireland. Valence is traded on the NASDAQ SmallCap Market under the symbol VLNC and can be found on the Internet at www.valence.com.

Forward-Looking Statement

The information contained herein includes "forward-looking statements." The company cautions readers not to put undue reliance on forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those described herein, for the reasons, among others, discussed in our reports filed with the Securities and Exchange Commission.