Clean Diesel Technologies Reports 2004 Fourth-Quarter and Year-End Results.

STAMFORD, Conn. -- Clean Diesel Technologies Inc. (CDT) (OTCBB:CDTI) (AIM:CDT) (AIM:CDTS), a developer of chemical and technological solutions to reduce harmful engine emissions, today announced its results for the fourth quarter and year ended Dec. 31, 2004. CDT reported an increase in Platinum Plus(R) additive and hardware revenue for the fourth quarter of 2004 and year-to-date over prior year periods. Total revenue for the fourth quarter was $194,000 with a net loss of $1,207,000, or $0.07 loss per share. This compares to total revenue of $89,000 and a net loss of $1,089,000, or $0.08 loss per share, for the same quarterly period in 2003. For the year ended Dec. 31, 2004, total revenue was $722,000 with a net loss of $4,143,000 or $0.26 loss per share. In the comparable 2003 period, revenue was $567,000 with a net loss of $3,245,000 or $0.26 loss per share.

The fourth quarter increase in Platinum Plus fuel borne catalyst (FBC) and Platinum Plus Purifier (hardware) revenue is attributable to initial sales of CDT's Environmental Protection Agency (EPA) verified system to several East Coast fleets and continued growth of FBC sales in the U.S. underground mining industry. CDT expects to build on the fourth quarter revenue as its FBC gains increased recognition in the United States, Europe and Asia for improving after-treatment devices such as filters and diesel oxidation catalysts (DOCs) and the retrofit markets expand. Sales of the FBC and hardware to beverage delivery, refuse and off-road vehicles were delayed in the fourth quarter as a result of requirements for automatic and on-board additive dosing technologies development and installation.

Dr. Bernhard Steiner, Clean Diesel Technologies CEO, commented: "The fourth quarter of 2004 saw increased European activity for the company with the establishment of a U.K. representative office, Clean Diesel International LLC, in December and the first European Platinum Plus FBC orders for diesel particulate filters."

Steiner also announced: "Clean Diesel International, in conjunction with its partner Dinex, was listed on the UK Energy Savings Trust Cleanup register for the Platinum Plus FBC in combination with a Silicon Carbide diesel particulate filter (DPF) from Dinex. Also late in 2004 Clean Diesel International's local Danish partner Daugbjerg, received Danish approval for the Platinum Plus FBC/DPF system. As a result Daugbjerg has been awarded two contracts for the FBC/DPF system as part of Copenhagen's DPF retrofit program."

In the United States, CDT has initiated a development program targeted at integrating the Platinum Plus FBC into advanced engines designed to meet strict 2007 particulate emission standards. These standards will require the use of diesel particulate filters on new engines and the FBC should help the filters from plugging during low temperature operation in city driving.

CDT's U.S. licensee for the ARIS(R) urea injection system received additional orders for the patented ARIS injector for mobile NOx reduction including an award from the state of Texas to verify the system with the EPA. Together CDT and Combustion Components Associates are approaching several European exhaust manufacturers about incorporating the ARIS injector into their NOx control systems for new and existing vehicles.

Activity for application of the ARIS system for diesel stationary power generation is expected to expand in Japan due to the recent initiatives under the Kyoto agreement.

Expenses increased in the fourth quarter and the full year primarily due to the increased personnel costs associated with the European operations as well as the hiring of a new CEO. CDT has also increased its sales and marketing activity in the quarter and the year. Incremental financial advisory fees in the third quarter associated with a potential stock registration also impacted the full year expenses.

Full financial information is included in the company's Form 10-K filed with the Securities and Exchange Commission (www.SEC.gov).

About Clean Diesel Technologies Inc.

Clean Diesel Technologies Inc. is a developer of chemical and technological solutions to reduce harmful engine emissions. Clean Diesel Technologies has patented products that reduce emissions from diesel engines while simultaneously improving fuel economy and power. Products include Platinum Plus(R) fuel catalysts, the Platinum Plus Purifier System, and the ARIS(R) 2000 urea injection systems for selective catalytic reduction of NOx. Platinum Plus and ARIS are registered trademarks of Clean Diesel Technologies Inc. For more information, visit CDT at www.cdti.com or contact the company directly.

Clean Diesel International LLC is located in Surrey England, south of London.

Certain statements in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known or unknown risks, including those detailed in the company's filings with the Securities and Exchange Commission, uncertainties and other factors which may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

TABLES FOLLOW

CLEAN DIESEL TECHNOLOGIES INC.
                       STATEMENTS OF OPERATIONS

                                  (in thousands except per share data)

                                      Three Months      Twelve Months
                                      Ended Dec. 31,    Ended Dec. 31,
                                      2004     2003     2004     2003
Revenue:
Additive revenue                   $   100  $    58  $   299  $   212
Hardware revenue                        89       24      369      161
License and royalty revenue              5        7       54      194
Total revenue                          194       89      722      567

Costs and expenses:
Cost of revenue                        121       51      455      219
General and administrative           1,201      840    3,962    2,695
Research and development               162      266      506      855
Patent amortization and other
 expense                                29       29       90       58

Loss from operations                (1,319)  (1,097)  (4,291)  (3,260)
Foreign currency exchange gain         101       --      101       --
Interest income                         11        8       47       15

Net loss                           $(1,207) $(1,089) $(4,143) $(3,245)

Basic and diluted loss per common
 share                             $ (0.07) $ (0.08) $ (0.26) $ (0.26)

Weighted average number of common
 shares outstanding - basic and
 diluted                             17,128   12,721   16,071   12,721



                    CLEAN DIESEL TECHNOLOGIES INC.
                             BALANCE SHEET

                                      (in thousands except share data)

                                                   Dec. 31,   Dec. 31,
                                                     2004       2003
Assets
Current assets:
Cash and cash equivalents                          $  4,265  $  6,515
Accounts receivable, Net                                145       115
Inventories                                             387       320
Other current assets                                     71        73
Total current assets                                  4,868     7,023

Patents, Net                                            418       274
Fixed Assets, Net                                       200       126
Other assets                                             27        18
Total assets                                       $  5,513  $  7,441

Liabilities and Stockholders' Equity
Current liabilities:

Deferred compensation and pension benefits         $    ---  $    441
Accounts payable and accrued expenses                   391       427
             Total current liabilities                  391       868


Stockholders' equity:
Preferred stock, par value $0.05 per share,
 authorized 80,000 shares, no shares issued and
 outstanding                                             --        --
Common stock, par value $0.05 per share,
 authorized 30,000,000 shares, issued and
 outstanding 17,165,868 and 15,679,387 shares,
 respectively                                           858       784
Additional paid-in capital                           38,431    35,813
Accumulated deficit                                 (34,167)  (30,024)
Total stockholders' equity                            5,122     6,573
Total liabilities and stockholders' equity         $  5,513  $  7,441