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ELECTROSOURCE ANNOUNCES RECEIPT OF LETTER AGREEMENT

 ELECTROSOURCE ANNOUNCES RECEIPT OF LETTER AGREEMENT
 AUSTIN, Texas, May 18 /PRNewswire/ -- Electrosource, Inc. (NASDAQ: ELSI) announced today that it has received a letter agreement from the Electric Power Research Institute (EPRI) of Palo Alto, Calif.
 The letter agreement authorizes ELSI to commence work on a 42-month research and development program relating to its Horizons Electric Vehicle (EV) Battery. ELSI and EPRI estimate that the program will involve approximately $5.4 million in expenditures. The goal of the program is to complete the development of the battery and to position the company for market and production development and pilot production of the battery. The 1992 portion of the program calls for total expenditures of $1 million, with EPRI to provide one-half of this amount. Continuation of work beyond 1992 will be dependent upon the ability of EPRI and ELSI to secure additional financing from utility companies and other sources.
 The letter agreement contemplates that terms of a final agreement between EPRI and ELSI will be negotiated prior to June 30, 1992, and imposes a $125,000 cap on EPRI's obligation to fund the work prior to the anticipated June 30 contract date. Pending finalization of the definitive agreement, EPRI has the right to terminate its authorization of work on two weeks written notice, provided that it pays for all costs and noncancelable commitments incurred by ELSI up to the $125,000 limit.
 Jack Guy, manager for Technology Commercialization for EPRI's Customer Systems Division, has characterized the program to be "of major importance to the electric transportation industry and also having potential for utility applications."
 Benny E. Jay, president of Electrosource, commented that, "Electrosource has been working with EPRI for several months to secure funding, and we believe that this initial commitment shows confidence by EPRI in the ability of Electrosource to produce an advanced lead acid battery for application in electric vehicles, as well as other applications. We will continue to work with EPRI to secure additional funding for completion of work to be performed pursuant to a statement of work which has been provided by EPRI and which details research and development work to be performed by ELSI under the EV program."
 ELSI is a publicly traded company headquartered in Austin, Texas. The company's principal business is developing advanced lead acid batteries for commercial applications. EPRI is a research and technology commercialization organization funded by electric utility companies. Approximately 70 percent of such domestic electric utility companies are members of EPRI.
 -0- 5/18/92
 /CONTACT: Audrey T. Dearing of Electrosource, 512-445-6813/
 (ELSI) CO: Electrosource Inc. ST: Texas IN: SU:


PS -- NY029 -- 1238 05/18/92 10:41 EDT
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Publication:PR Newswire
Date:May 18, 1992
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