Electrosource Batteries Selected By PEI Electronics

18 February 2000

Electrosource Batteries Selected By PEI Electronics for Electric and Hybrid-Electric Buses Manufactured by Advanced Vehicle Systems Inc.

    SAN MARCOS, Texas--Feb. 18, 2000--Electrosource Inc. ("The Company") announced today it has received an order from PEI Electronics Inc. (PEI) of Huntsville, Ala., for its 12Volt 85 Ah Horizon(R) Batteries.
    PEI will use the batteries to provide auxiliary power and electrical energy storage in their advanced hybrid-electric drive train.
    The Electrosource batteries will be used in ten newly-designed electric and hybrid-electric buses that are being manufactured by Advanced Vehicle Systems Inc. (AVS) for the Chattanooga Area Regional Transportation Authority. The first AVS 30- and 35-foot buses will be delivered beginning in the first quarter of 2000 and will replace diesel buses currently used in regular transit applications.
    "Electrosource will deliver these batteries during the first five months of 2000," said B.E. Jay, Electrosource President and CEO. "We are pleased that through a competitive evaluation process, PEI and AVS have selected our Horizon(R) technology to outfit these advanced public-transit vehicles. This order is particularly satisfying since it is the second major hybrid-electric vehicle program to select our high-performance lead-acid batteries over competing products and rechargeable-battery technologies."
    Electrosource is a manufacturer of high-power, light-weight batteries for use in electric and hybrid-electric vehicles, engine-starting and telecommunication stand-by power applications.
    PEI Electronics Inc. is a systems engineering company engaged in a wide variety of commercial and military advanced systems development activities.
    AVS is a leading manufacturer of electric and hybrid-electric buses for public-transit service.
    Additional information about these companies can be found at www.electrosource.com, www.pei-electronics.com and http://new.chattanooga.net/etvi/AVS.html.

This release contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in this release. Risks include financial risks, development risks, manufacturing risks, uncertainty of market acceptance, delay in shipment or cancellation or orders, customer reorganization, as well as other risks that are detailed from time to time in the company's Securities and Exchange Commission filings.