U.S. Li-ion Auto Battery Maker Ener1 Voices Support for $1.6 Billion Federal Grant to Propel Electric Vehicle Technology

INDIANAPOLIS, Dec. 19 /PRNewswire-FirstCall/ — A new plan proposed this
week by Indiana Senator Evan Bayh involving $1.6 billion in federal grants to
accelerate growth of America’s advanced hybrid-electric and electric car
industry is crucial for American competitiveness in automotive and high-tech
manufacturing, Charles Gassenheimer, Chairman and CEO of Ener1, Inc.
(Amex: HEV), said today. Ener1′s Indianapolis subsidiary EnerDel is the first
company able to produce automotive lithium-ion batteries on a commercial scale
in the U.S.

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Gassenheimer stood with the Senator for a press conference today at the
Indianapolis Motor Speedway.

“Senator Bayh’s plan could not come at a more critical time,” commented
Gassenheimer. “We think it will pay for itself many times over,” Gassenheimer
said, comparing advances in the rapidly emerging sector to the birth of
America’s Silicon Valley computing industry. “This is a high-tech,
high-growth, high-value industry, invented right here in America, and Indiana
is at the center of it. The priority now to build the production capacity we
need before foreign competitors beat us at our own game.”

Senator Bayh discussed his proposal today at an event gathering many of
the state’s top auto-tech manufacturers at the Indianapolis Speedway. The
legislator, who is one of the Congress’s leading champions of U.S. energy
security and alternative fuel automobiles, has offered his plan to the Senate
majority and minority leaders, co-signed by 11 other senators.

Automakers around the world have dozens of new hybrid models already in
the pipeline, but almost no current sources for batteries to power them. The
rush is on in Europe, Japan, Korea and China to capture their shares of a
market that could be worth as much as $150 billion a year within a decade,
some analysts say. U.S. carmakers worry that without a domestic battery
supply chain they could find themselves at the back of the line, or forced to
pay steep premiums.

“Viability of the American auto industry depends on the decisions and the
investments we make today,” Gassenheimer said. “The last thing we want is to
trade dependence on foreign oil for dependence on foreign batteries. Senator
Bayh is proposing a down payment on our long-term competitiveness and
security. We deeply appreciate and commend the energy and vision he is
bringing to this incredibly important goal.”

While costs remain a challenge for the advanced battery industry today,
Gassenheimer believes full-scale production could cut current prices by half.
EnerDel is currently undergoing a major expansion at its two Indiana
facilities.

Sen. Bayh’s proposal to provide $1.63 billion in federal grants through
the U.S. Department of Energy is designed to ramp up production and drive down
costs of hybrid and electric drive systems. The package includes:

    -- $1.0 billion in competitive grants to expand the U.S. manufacturing
       base for advanced batteries and other essential components.

    -- $295 million for R&D on new battery technology.

    -- $90 million in grants for state and local business and governments to
       build the infrastructure and other resources such as rapid-recharging
       stations to support plug-in and other technologies.

    -- $95 million in grants for near-term truck and maritime port
       electrification, which saves energy and dramatically cuts dangerous
       pollution.

    -- $150 million for research and development of "smart-grid" technology
       that can save consumers money and help integrate plug-in vehicles while
       improving capacity and reliability of the nation's aging electric
       system.

By comparison, Gassenheimer points out that Japan’s combined public and
private investment in advanced battery development has outpaced that of the
United States by as much as 10-fold for most of the past decade. Some in the
industry are already worrying about what an emerging “battery gap” might mean
for their ability to procure enough of these essential components for fuel-
efficient autos.

Toyota already owns a major stake in Panasonic’s battery business; Honda
and Mercedes Benz have just entered into new joint lithium-ion battery
ventures.

“This is only the eye of an energy price storm,” Gassenheimer said.
“We’re getting a temporary break at the gas pump right now, but it’s only
going to last as long as the economic downturn. Then we’re right back to
facing devastating price shocks. Industry and government increasingly appear
ready to move forward together and that means we will prevail economically and
in guaranteeing our energy security.”

Safe Harbor Statement:

Certain statements made in this press release constitute forward-looking
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and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,”
“scheduled,” “estimates” and variations of these words and similar expressions
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may differ materially from what is forecast in forward-looking statements due
to a variety of factors. All forward-looking statements speak only as of the
date of this press release and the company does not undertake any obligation
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reflect events, circumstances or changes in expectations after the date of
this press release.

About Ener1, Inc.:

Ener1 develops and manufactures compact, high performance lithium-ion
batteries to power the next generation of hybrid and electric vehicles. The
publicly traded company (Amex: HEV – News) is led by an experienced team of
engineers and energy system experts at its EnerDel subsidiary located in
Indiana. EnerDel has developed proprietary battery systems based on technology
originally pioneered with the assistance of the Argonne National Lab.

Ener1 is seeking to become the first company to mass-produce a cost-
competitive lithium-ion battery for hybrid and electric vehicles. Demand for
battery solutions is being driven by a need to reduce dependence on oil as
well as growing concern about vehicle emissions. In addition to the automobile
market, applications for Ener1 lithium-ion battery technology include medical,
military, aerospace, electric utility and other growing markets.

Major shareholders of Ener1 include Ener1 Group, Inc., a privately held,
global investment and advisory firm, and ITOCHU Corporation, a Japanese
trading company and distributor of manufacturing equipment essential to
lithium-ion battery production. ITOCHU has annual revenue of approximately $90
billion and offices in more than 80 countries. Ener1 has also received funding
from a growing number of institutional investors.

In addition to battery technology, Ener1 develops commercial fuel cell
products through its EnerFuel subsidiary and nanotechnology-based materials
and manufacturing processes for batteries and other applications through its
NanoEner subsidiary.

    Contacts:    INVESTOR RELATIONS            MEDIA RELATIONS
                 Rachel Carroll                Jon Coifman
                 VP Corporate Communications   Waggener Edstrom Worldwide
                 P: 212 920 3500               P: 212 551 4815
                 E: rcarroll@ener1.com         E: jcoifman@waggeneredstrom.com

SOURCE Ener1, Inc.