China's First Auto Works Chooses Enova for Hybrid Drive Systems

TORRANCE, Calif.--Aug. 1, 20041, 2004--Enova Systems (OTCBB:ENVA), a developer and manufacturer of electric, hybrid and fuel cell digital power management systems, announced today that it has entered into a development and sales agreement with China's First Auto Works (FAW) for parallel hybrid drive systems for their hybrid buses. FAW signed a two-phase development agreement with Enova for hybrid-electric motors and power controllers for its newest hybrid buses.

Enova is working with both FAW and the Southwest Research Institute (SwRI) of Texas to integrate and validate the new Enova parallel hybrid drive system for these buses. In the first phase, Enova's Panther(TM) 90kW drive system will be customized to FAW's specification and evaluated for performance in three FAW buses. During the second phase, anticipated to commence in early 2005, Enova will further enhance its parallel hybrid motor and controller for FAW buses for increased production. These buses are anticipated to be used to shuttle athletes and guests at the 2008 Beijing Summer Olympics and the 2010 World's Expo in Shanghai. China is potentially seeking up to 1,000 full-size hybrid-electric buses to support these global events.

Dr. Li Jun, Chief Engineer of FAW Research and Development Center, commented, "After analyzing many hybrid-electric drive systems for FAW, we chose Enova based on their hybrid technology performance and recommendations from SwRI. FAW believes Enova will provide the optimal parallel hybrid drive system solution for our newest hybrid buses. We look forward to a long, mutually prosperous relationship with our new partner.

"FAW is the largest automobile manufacturer in China, having more than 50 years' experience in design and manufacture of commercial vehicles and passenger vehicles. Production volumes have exceeded 900,000 units per year since 2003," continued Dr. Li Jun. "FAW thinks that environmentally friendly vehicles, including battery-electric, hybrid-electric and fuel cell vehicles, have great prospects for the next generation of vehicles. FAW will focus initially on hybrid-electric vehicles for its first production to market. With an accumulation of experience through cooperation with a mature component supplier such as Enova, FAW will also develop fuel cell and battery vehicles in the future, assisting FAW's competitive position in the automotive and transit markets. FAW believes it will be the premier manufacturer of hybrid-electric vehicles."

This newest alliance with FAW was made possible with the assistance of SwRI. With more than 40 years of experience in automotive research, Southwest Research Institute offers a unique range of capabilities for electric and hybrid vehicle research and development. Their staff has extensive experience in the design, development, and evaluation of vehicle systems and hardware. Enova has worked with SwRI on various hybrid drive technologies, benefiting from SwRI's expertise and analysis in the area of hybrid and other advanced drive system technologies.

With the addition of FAW, Enova now teams with a major bus manufacturer in Asia and Europe. Enova's heavy-duty drive systems continue to demonstrate their versatility in a variety of vehicle applications in the U.S., the United Kingdom, Japan, Italy and other countries. The Panther(TM) 90kW, 120kW and 240kW drive systems power buses, trucks, tractors and other industrial vehicles in pure electric, series-hybrid, parallel hybrid and fuel-cell hybrid configurations.

"With this development and production agreement with FAW, Enova has firmly established its presence in the Chinese hybrid bus markets. FAW is the fourth bus manufacturer in China to recognize the versatility and robustness of Enova's hybrid technology in the heavy-duty markets. FAW, with its expertise in not only buses, but also automobiles and trucks, affords Enova a major opportunity to capture additional market share for both light and heavy-duty vehicles throughout China and other parts of Asia," remarked Carl D. Perry, president and CEO. "Enova is honored to be chosen by FAW as its parallel hybrid drive system component supplier, and we look forward to growing the hybrid vehicle markets in China with our newest alliance partners."