Ballard Acquires XCELLSIS Fuel Cell Engines and Ecostar Electric Drive Systems from DaimlerChrysler and Ford.

Business Editors & Automotive Writers

VANCOUVER, B.C. & STUTTGART, Germany & DEARBORN, Mich.-- (AutomotiveWire)--Oct 2, 2001

DaimlerChrysler and Ford Increase Commitment and Investment in

Ballard

Ballard Power Systems Inc. (NASDAQ:BLDP)(TSE:BLD.), DaimlerChrysler AG and Ford Motor Company today announced the signing of an agreement in which Ballard will acquire the interests of DaimlerChrysler and Ford in XCELLSIS GmbH and Ecostar Electric Drive Systems LLC.

XCELLSIS and Ecostar were formed as part of the vehicular fuel cell alliance between Ballard, DaimlerChrysler and Ford in 1998. These acquisitions will provide Ballard with an expanded range of products, from components to power generators and vehicular fuel cell power trains, and an unrivaled intellectual property portfolio. The transaction increases the commitment of DaimlerChrysler and Ford to, and reliance on, Ballard as their exclusive fuel cell engine supplier.

-- XCELLSIS develops, produces and sells proton exchange membrane (PEM) fuel cell engines for vehicular applications and integrates fuel cell engines and electric drive trains to form fuel cell power trains. The XCELLSIS fuel cell engine technology has been demonstrated in nine fuel cell buses, eight fuel cell powered prototype cars developed by DaimlerChrysler, three prototype cars developed by Ford and a Mazda prototype development vehicle. An XCELLSIS fuel cell engine has also been sold to Nissan. Currently, Ballard owns 26.7 percent of XCELLSIS and DaimlerChrysler and Ford own 51.5 percent and 21.8 percent, respectively.

-- Ecostar develops, produces and sells electric drive trains for use in electrically powered vehicles, and power conversion systems for microturbines, internal combustion engines and fuel cell products. The electric drive train technology of Ecostar was first used commercially in an electric powered version of the Ford Ranger pick-up truck. Ford's TH!NK City car will incorporate Ecostar's electric drive train beginning in 2002. Ecostar has developed power electronics for use with distributed stationary power generators powered by microturbines, internal combustion engines, fuel cells and renewable power. Currently Ballard owns 20.9 percent of Ecostar and Ford and DaimlerChrysler own 62.1 percent and 17.0 percent, respectively.

Firoz Rasul, Ballard's Chairman and Chief Executive Officer, said, "Consolidating XCELLSIS and Ecostar into Ballard will make Ballard a stronger company with expanded markets, more products, greater capabilities, an unrivaled technology portfolio and a formidable team, extending Ballard's lead in the fuel cell industry. This transaction will result in the increased commitment of DaimlerChrysler and Ford to Ballard's success. Ballard's expanded product range and enhanced ability to provide complete solutions will bring us much closer to all our customers."

Prof. Jurgen Hubbert, Member of the Board of Management of DaimlerChrysler and responsible for Mercedes-Benz cars and Smart, said, "To date, DaimlerChrysler has invested approximately US$1-billion in fuel cell research and development and presented ten fuel cell vehicles as either concept cars or test vehicles, each one powered by BALLARD(R) fuel cells. The new vehicular fuel cell alliance structure will further enhance the rapid technology development demonstrated to date. DaimlerChrysler will enthusiastically continue to pursue development of this revolutionary fuel cell technology with the goal of being first to market."

Wayne Booker, Vice-Chairman of Ford Motor Company, commented, "Ballard acquiring XCELLSIS and Ecostar will enhance the development of portable, stationary, and transportation fuel cell products. At Ford, we are committed to delivering environmentally-sound products to our customers. We see fuel cells as an important part of our long-term environmental strategy."

The timing for the commercial launch of Ballard's fuel cell products remains unchanged, with the launch of portable power products scheduled to occur later this year, followed by transit bus engines in 2002, intermittent stationary products in 2003 and automotive products in 2003 to 2005, as planned.

In parallel, Ballard will be launching several new products in 2002. These include new battery electric drive trains targeted for use in airline ground support baggage tractors and the Ford TH!NK City passenger car, and a power conversion system that will be available for use with microturbines and other stationary power generators.

Transaction summary:

-- Ballard will issue an aggregate of 18,403,523 common shares to acquire the interests of DaimlerChrysler (9,405,271 shares) and Ford (8,998,252 shares) in XCELLSIS and Ecostar. Based upon the closing price on October 1, 2001, the Ballard shares to be issued are valued at $553-million (US $348-million). The acquisition of DaimlerChrysler's ownership interest in XCELLSIS and the issuance of the related Ballard common shares will occur in two steps. Ballard will own the majority of the shares of XCELLSIS on closing and will acquire the remainder from DaimlerChrysler by November 2004.

-- As a result of the issuance of Ballard common shares, DaimlerChrysler and Ford will increase their ownership in Ballard to 23.6 percent and 19.5 percent, respectively, from 18.0 percent and 13.5 percent currently.

-- Ballard, DaimlerChrysler and Ford will enter into a new 20-year vehicular fuel cell alliance agreement, replacing the existing alliance agreement.

-- DaimlerChrysler and Ford will invest an additional $110-million (US $69-million) cash, $55-million through a private placement of Ballard common shares on the closing of the acquisitions and the remainder through participation in equity financings of Ballard within the next three years.

Benefits to Ballard:

-- Ballard's product line will now encompass vehicular fuel cell power trains, fuel cell engines, fuel cell power generators, power conversion systems, electric drive trains, fuel cell stacks, and carbon materials. Several of these products bring Ballard closer to the end customer, resulting in increased revenues and value capture. This expanded product line allows Ballard to serve a broader customer base.

-- As a result of the acquisition of XCELLSIS and Ecostar, Ballard will have new products that provide early revenues in emerging alternative energy markets. Power conversion systems provide entry into the growing stationary generation market, including renewable power, internal combustion engine and turbine based generators. Electric drive trains provide opportunities in the battery and hybrid electric vehicle markets.

-- Ballard's leading position in fuel cell intellectual property will be extended from 550 patents issued or pending to over 1,200 patents issued or pending, covering almost 500 distinct inventions.

-- The consolidation and simplification of management and operations will generate significant cost reductions, efficiency improvements, and productivity enhancements.

Ballard's headquarters, fuel cell development and manufacturing facilities, and portable and stationary fuel cell generator development will continue to be located in Vancouver, Canada. Operations focused on transportation fuel cell engines and fuel processing development, assembly and testing will be located in Nabern, Germany, and facilities focused on electric drive train and power conversion system development, assembly and testing will be located in Dearborn, Michigan. Ballard's facility for the development and manufacturing of carbon materials will continue to be located in Lowell, Massachusetts. All locations are key strategic centres of engineering excellence and product development.

Ballard's senior management team will be expanded to reflect the broader scope of its business and will benefit from both continuity and new talent. Changes will include the departure of Kip Smith, Ballard's President and Chief Operating Officer. Kip has determined that for personal reasons he will not fill the President's role following the closing of the transaction.

Kip Smith, Ballard's President and Chief Operating Officer, stated, "This is a strategically compelling transaction because it will enable Ballard to expand the scope of its business, enhance its product development capabilities and broaden its interaction with customers. My decision to leave Ballard and pursue other business interests was a difficult one based on personal and family considerations. I am confident that the integration of Ballard, XCELLSIS and Ecostar will strengthen Ballard's leadership in the fuel cell industry."

"While I regret Kip's departure, I respect his decision," said Firoz Rasul. "Kip's contribution to Ballard has been substantial and lasting, including his enthusiastic support for this transaction. I appreciate his willingness to assist Ballard with the integration of our new businesses."

The boards of directors of Ballard, DaimlerChrysler and Ford have unanimously approved the transaction, as has an independent committee of the board of directors of Ballard. To complete the transaction, Ballard will hold a Special Meeting of its shareholders on November 27, 2001 in Vancouver, where shareholders will be asked to approve the acquisition and related matters. A management proxy circular providing a detailed description of the transaction will be mailed to shareholders in late October. The transaction is also subject to the approval of various regulatory agencies in Canada, the United States, and Germany. The transaction is expected to close in 2001.

On closing of the transaction, DaimlerChrysler and Ford's representation on Ballard's 12 member board of directors will increase to a total of five directors. DaimlerChrysler's nominees will be Prof. Jurgen Hubbert, Member of the Board of Management of DaimlerChrysler and responsible for Mercedes-Benz cars and Smart; James D. Donlon III, Senior Vice President - Controlling Chrysler, and Dr. Hans-Joachim Schopf, head of Development and member of the Divisional Board of Management at Mercedes-Benz cars and Smart. Ford's nominees will be John M. Rintamaki, Group Vice President and Chief of Staff and Dr. Gerhard F.A. Schmidt, Vice-President, Research.

Goldman, Sachs & Co. is advising Ballard on the transaction. RBC Dominion Securities of Vancouver is acting as advisor to the independent committee of Ballard's board of directors.

Additional Information:

DaimlerChrysler AG, a global corporation with over 417,000 employees, began its car-making lineage in 1886 with the world's very first automobile and has continued, from inception, to provide its customers with a century of technical innovations that steadily advance frontiers. DaimlerChrysler is a leading automotive, transportation and services company, with its car, truck, train, aerospace and financial services. For over ten years, DaimlerChrysler has been working on the development of fuel cell vehicles and, since 1994, has presented ten fuel cell vehicles as either concept cars or test vehicles, fueled by liquid hydrogen, compressed hydrogen and methanol. DaimlerChrysler plans to introduce its first fuel cell cars to the market in 2004 and has already offered the first 30 fuel cell buses to transit customers for delivery to 10 European cities beginning in 2002.

Ford Motor Company is the world's second largest automaker, selling vehicles in 200 markets with approximately 345,000 employees on six continents. Ford Motor Company is aggressively pursuing and implementing advancements that reduce the environmental impact of automobiles on the planet. Specifically, TH!NK Technologies is dedicated to engineering fuel cell and battery electric vehicles that produce zero emissions and may replace conventional vehicles. Ford is taking a leadership role in moving fuel cell technology from the laboratory to vehicles on the road. Ford's commitment is demonstrated by their zero-emission Ford Focus FCV hydrogen fuel cell vehicle and their active participation in the California Fuel Cell Partnership.

A press conference regarding this event will commence at 10:30 a.m. Eastern time today at the Detroit Athletic Club, 241 Madison Avenue, Detroit, Michigan. The press conference may be accessed either by calling the operator at [phone] prior to the scheduled start time or through a live webcast that can be accessed from Ballard's web site at www.ballard.com. A telephone playback version of the press conference will be available for 24 hours after the call at [phone]. The confirmation number to access the playback version is 136647#. A playback of the press conference will be available on Ballard's web site for two weeks.

A telephone conference call and audiocast for analysts and investors to discuss the acquisition of XCELLSIS and Ecostar will be held at 3:00 p.m. Eastern time today. The conference call may be accessed either by calling the operator at [phone] prior to the scheduled start time or through a live audiocast that can be accessed from Ballard's web site at www.ballard.com. A telephone playback version of the conference call will be available for 24 hours after the call at [phone]. The confirmation number to access the playback version is 142257#. A playback of the conference call will be available on Ballard's web site for two weeks.

A video news release will commence at 10:20 a.m. Eastern time today. The video news release may be accessed by satellite at the following coordinates: North American: Galaxy 11, xp K14/Slot B; or, Europe: PAS 3R, xp. 9K/Slot F.

A satellite media tour will commence at 1:00 p.m. Eastern time today. Satellite media interviews will be available with senior representatives of Ballard, DaimlerChrysler and Ford. Satellite interviews may be booked in advance by contacting Lorraine Wilson at [phone] or [e-mail]. The media tour will be accessible by satellite at the following coordinates:

North American Satellite Feed Coordinates:
Galaxy 11, xp K14/Slot B
U/L Freq: 14275.5 Horiz
D/L Freq: 11975.5 Vert
Digital 9 Mhz, NTSC

European Satellite Feed Coordinates:
PAS 3R, xp. 9K/Slot F
U/L Freq:  14301.5 Vert
D/L Freq: 12553.5 Vert
Digital 9 Mhz, PAL

North American Satellite Technical Detail:
NDS Encoding; MPbol:  6.111 Ms/s; FEC:  3/4

European Satellite Technical Detail:
NDS; MPEG2, 4:2:0; Data Rate:  8.448
Mbps; Symbol:  6.111 Ms/s; FEC:  3/4

This release contains forward-looking statements that are based on the beliefs of Ballard's management and reflect Ballard's current expectations as contemplated under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. When used in this release, the words "estimate," "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," the negative of these words or such other variations thereon or comparable terminology are intended to identify forward-looking statements. Such statements reflect the current views of Ballard with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in those forward-looking statements.

Ballard Power Systems is recognised as the world leader in developing, manufacturing and marketing zero-emission proton exchange membrane ("PEM") fuel cells for use in transportation, electricity generation and portable power products. Ballard Power Systems' proprietary fuel cell technology is enabling automobile, electrical equipment and portable power product manufacturers to develop environmentally clean products for sale. The fundamental component of these end-user products is the BALLARD(R) fuel cell that combines hydrogen (which can be obtained from methanol, natural gas, petroleum or renewable sources) and oxygen (from air) without combustion to generate electricity. Ballard is partnering with strong, world-leading companies, including DaimlerChrysler, Ford, ALSTOM and EBARA, to commercialise BALLARD(R) fuel cells. Ballard has also supplied fuel cells to Honda, Nissan, Volkswagen, Yamaha, Cinergy, Coleman Powermate and Matsushita Electric Works, among others. Ballard Material Products, a subsidiary of Ballard Power Systems, is a Tier 1 automotive supplier of friction materials for power train components to General Motors and Borg Warner, as well as a supplier of gas diffusion layer materials for the fuel cell industry.

Ballard's common shares are listed on The Toronto Stock Exchange under the trading symbol "BLD" and on the Nasdaq National Market System under the symbol "BLDP." Ballard, the Ballard logo and Power to Change the World are registered trademarks of Ballard Power Systems Inc.