Enova Systems Reports 2004 First-Quarter Results and Other Notable Developments.

Business Editors

TORRANCE, Calif.--(BUSINESS WIRE)--May 18, 2004

Company's Streamlining Efforts Achieve Major Reduction

in Net Operating Loss;

Enova's Heavy-Duty Hybrid Drive Systems Gaining Market Acceptance

Enova Systems (OTCBB:ENVA) today announced financial results for its first quarter ended March 31, 2004.

For the first quarter ended March 31, 2004, the Company reported revenues of $1.1 million and a significant reduction in losses from continuing operations. Excluding depreciation and amortization, Enova's loss before interest, taxes, depreciation and amortization (EBITDA) was $31,000, essentially break-even for the quarter, a 95% improvement from the EBITDA loss of $611,000 in the same period of 2003.

Net loss for the first quarter was $161,000, a 78% improvement over the $743,000 reported in the first quarter of 2003. This significant reduction in losses from continuing operations marks a significant milestone in Enova's strategy. The Company has been pursuing a program of reducing non-essential expenses for administration and internal research and development, without sacrificing its competitive advantage, in order to attain near-term profitability.

Carl Perry, the Company's President and CEO, commented, "Enova Systems continues to make strong progress in emerging heavy-duty hybrid drive system markets. As transportation sectors worldwide embrace the economic and environmental benefits of hybrid systems, Enova is poised to become a major player in these heavy-duty markets for not only trucks and buses, but also for a wide variety of other applications such as military vehicles, trains, monorails, marine applications, construction vehicles and other industrial applications."

Mr. Perry continued, "Enova believes its market growth to be driven by the Company's ability to provide unique, cost-effective and robust power management and conversion solutions to meet the diverse requirements of world-class manufacturers over a wide spectrum of transportation areas."

Anthony Rawlinson, Enova's Chairman of the Board, said, "The Board is pleased with management's and the Company's operational streamlining efforts, and its continued, strong focus on hybrid drive systems to a growing number of Tier 1 automotive and transportation companies."

Notable achievements during the first quarter include:

The Company expanded its presence in the Asian markets for hybrid and fuel cell systems with the addition of two new customers in China: Shenzhen Minghua Environmental Protection Vehicle Co., Ltd. for diesel-hybrid buses and Tsinghua University for fuel cell hybrid bus development. China requires developing up to 1,000 full-size hybrid electric buses to support the 2008 Beijing Summer Olympics and the 2010 World Expo in Shanghai. Recommendations from Tsinghua are beginning to produce results including commencing negotiations to sell our Panther(TM) 120kW drive systems and other hybrid-electric components to other potential China-based bus manufacturers in 2004 and beyond.

Other notable 2004 opportunities for the Company's hybrid drive systems for buses, trucks, trains and other heavy-duty applications include additional development and production programs with Mack / Volvo, Wright Bus of the U.K., Tomoe of Japan and MTrans of Malaysia. Each of these manufacturers, as well as other potential new customers, present Enova with production prospects for 2005 and beyond.

Enova's fuel cell-enabling components are proposed for deployment in fleets of fuel cell vehicles being utilized by both Ford Motor Company, the Ford Focus FCV, and Hyundai Motor Company, the Hyundai Tucson fuel cell hybrid electric vehicle, in response to the U.S. Department of Energy's solicitation titled "Controlled Hydrogen Fleet and Infrastructure Demonstration and Validation Project." This government-funded project will last over five years, commencing in late 2004, evaluating the economic and performance feasibility of fuel cell vehicles and infrastructure across the U.S.

Another significant event for Enova in the first quarter was the commencement of service, on February 19th, of the State of Hawaii and U.S. Air Force's first hydrogen fuel cell bus at Hickam Air Force Base. The Enova modified bus integrates Enova's leading-edge drive systems and fuel cell-enabling technologies with Canadian-based hydrogenics fuel cell systems. The entire integration process for this bus was accomplished in 90 days.

In the first quarter of 2004, Enova also promoted Mr. Larry Lombard to the position of Acting Chief Financial Officer and Mr. Ed Moore to the position of Chief Operating Officer of the Company. Management and the Board of Directors believes these two appointments will assist the Company in further developing it market strategies and achieving the goals of market penetration and profitability.

About Enova Systems

Enova Systems develops and produces advanced software, firmware and hardware for applications in the growing alternative power industry. The Company's focus is digital power conversion, power management, and system integration, for two broad market applications -- vehicle power generation and stationary power generation. The Company develops, designs and produces drive systems and related components for electric, hybrid-electric, fuel cell and microturbine powered vehicles.

This news release contains forward-looking statements relating to Enova Systems and its products. These forward-looking statements are subject to and qualified by certain risks and uncertainties. Such statements do not imply the future success of the Company or its products. These risks and uncertainties and other risks are detailed from time to time in Enova Systems' periodic filings with the Securities and Exchange Commission under the name Enova Systems, Inc., including but not limited to Enova's annual report on Form 10-K for the year ended December 31, 2003. Enova assumes no duty to update these statements.