Ener1 Acquires One of South Korea's Largest Lithium-Ion Cell Producers

Ener1 purchased the equity stake in Enertech International (formerly Saehan Enertech) for 5 million shares of Ener1, Inc. common stock, 2.56 million warrants and $600,000 in cash from TVG Capital Partners, a mid-market private equity firm that has operated in Asia since 1998. The warrants have a two-year maturity and are exercisable into Ener1 stock at a strike price of $7.50. As a result of this transaction, Ener1's consolidated shareholders' equity is set to increase by approximately $45 million.

"This is an opportune time to buy a compelling strategic asset at a very attractive valuation," Charles Gassenheimer, CEO of Ener1, commented. "The number of hybrid and plug-in electric vehicles in circulation is set to quintuple by 2012, suggesting a potential market for automotive lithium-ion batteries at $20-30 billion, versus the $7 billion that is spent on consumer electronics today. The current manufacturing base for consumer electronics was built over a 20 year period, while this new production capacity is targeted for completion in a quarter of that time."

"We are pleased to become long-term shareholders of Ener1, Inc. We have monitored the performance of the company as a key supplier for the past 6 months and believe that Ener1 is particularly well-positioned to create significant equity value for shareholders in this explosive growth market," said Varun Bery, co-founder of TVG Capital Partners.

Gassenheimer added, "Ener1 has succeeded in overcoming significant barriers to entry in the automotive battery market through our ability to work with multiple chemistries, expressly designed for the auto industry over the past five years. These chemistries solve the current problems associated with lithium-ion battery technology including thermal performance and long life. The acquisition of a prime operational facility in a key manufacturing location accelerates our lead time and intensifies our global footprint, further substantiating Ener1's position as a market leader at a crucial time for the industry."

In addition to acquiring a state of the art production facility and highly skilled engineers, the acquisition also increases the number of patents in Ener1's extensive portfolio by 20 to a total 132, including a U.S. and worldwide patent for the stack winding and manufacturing method, a vital technique in the manufacture of large format flat (or "prismatic") cells, widely considered to be the most advanced battery solution for automotive applications. The Korean plant is ISO9001 and TL9000 certified, and generated 2007 revenues of $60.9 million, and EBITDA of $7.2 million. Enertech has previously worked with Ener1's lithium-ion battery subsidiary, EnerDel, to supply prototype and preproduction battery systems for Think Global, a European based electric vehicle manufacturer. It is expected that Think Global and EnerDel will produce the first commercially available pure electric vehicle powered with a lithium-ion battery, to be marketed in Europe at the beginning of 2009.

Ener1's manufacturing facilities in Asia and the U.S. currently have the potential to generate $125 and $250 million in annual revenues respectively, with limited additional capital expenditures. The company has stated it will continue to invest in plant and machinery to increase existing capacity as volume orders from auto manufacturers are confirmed. Once they are fully built-out, Ener1's facilities will have the ability to produce battery packs for approximately 45,000 electric vehicles, or 450,000 hybrid electric vehicles, per year which would equate to as much as $700 million in annualized revenue at current wholesale prices. Ener1 estimates that for every dollar it spends on capital expenditure, it will return $4-6 in annual revenues.

Management hosted a conference call on Thursday, October 16, to discuss the acquisition. A replay of the call is available on the company website at www.ener1.com.

Posted October 28th, 2008