USABC Funds $8 Million Cost-Reduction Program with GM-Ovonic

December 5, 1996--Ovonic Battery Company, Inc. ("Ovonic Battery"), a subsidiary of Energy Conversion Devices, Inc. ("ECD"), announced today that the United States Advanced Battery Consortium ("USABC") has approved funding for an $8 million, 15-month program to reduce the costs of manufacturing nickel-metal hydride ("NiMH") electric vehicle ("EV") batteries. This is a very important next step as NiMH EV battery production begins at the GM Ovonic L.L.C. ("GM Ovonic") manufacturing plant. GM Ovonic is the manufacturing joint venture between General Motors Corporation ("GMC") and Ovonic Battery. Production tests of the NiMH battery have confirmed its robust design and superior driving range capabilities in several automakers' electric vehicles. It is becoming clear that production Ovonic NiMH batteries will make electric vehicles practical now and into the next century.

"Our goal is to take a battery proven in performance, maintain that performance, but reduce its costs to affordable levels," according to Mr. Bruce Rauhe, USABC Program Manager. S.R. Ovshinsky, President and CEO of ECD and CEO of Ovonic Battery, noted that Ovonic Battery has been working with GM Ovonic to ensure that the business plan battery costs are achieved. Saying that "Technology improvements, increasing production volume, and material and process improvements are all important factors in meeting our cost objectives," Mr. Ovshinsky added, "the USABC cost-reduction program, a collaborative effort between Ovonic Battery and GM Ovonic, will be a great help in accelerating cost-reduction proposals into production batteries."

Today is also the first day the GMC electric vehicle, EV-1, will be offered to customers in California and Arizona. Twenty six Saturn retailers in Los Angeles, San Diego, Phoenix and Tucson are excited about the public interest in electric vehicles and they expect their initial supply of EV-1s will quickly move out of their showrooms onto the roads. Congratulating the GM Advanced Technology Vehicles team that developed and built the EV-1, ECD/Ovonic Battery Chairman, R.C. Stempel, said, "all of us at ECD and Ovonic Battery are pleased to see this advance in automotive technology become reality and look forward to 1997 when a very good electric vehicle becomes a truly great car when equipped with NiMH batteries." All of the initial EV-1s are equipped with valve regulated lead-acid batteries. The GM Ovonic team has reached the NiMH EV battery production startup stage with Ovonic Battery supplying the negative electrode material and other components to the joint ! ! ! vent ure.

The following excerpts are from the Fall 1996 USABC newsletter:

                Bruce Rauhe, USABC program manager, said:  "There are
               two paths that can be taken to achieve this goal--save
               on the actual materials used or save in the production
               process.  Ideally we want to do both."

               Since the high cost of producing NiMH batteries is found
               in the components of the battery, such as the nickel in
               the electrodes, GM Ovonic is focusing on ways to use fewer
               electrodes and less materials on the electrodes without
               affecting power or energy.
               "Another cost-saving measure in the future will be automation
               of battery production," Rauhe said.  Currently battery
               production requires a significant amount of low-volume,
               labor-intensive operations.

               The GM Ovonic cost reduction program is focused on USABC's
               Phase II objective to develop manufacturing processes for
               mid-term batteries related to cost and quality enhancements.

               OBC was the first battery developer to receive a USABC contract
               for its development of NiMH.  OBC will play a major role
               supporting GM Ovonic in the new contract.

               "GM Ovonic was formed to commercialize NiMH batteries," said Rauhe.
               "And this contract with GM Ovonic is an important step in bringing
               their NiMH batteries closer to successful commercialization."

ECD is a leader in the synthesis of new materials and the development of advanced production technology and innovative products. ECD has pioneered the field of amorphous, disordered and related materials. It has developed proprietary products and production technology and is a leader in the fields of alternative energy and advanced information. ECD's products and production technology in the field of alternative energy are being manufactured and marketed through alliances throughout the world with major companies, such as General Motors Corporation and Canon, Inc. In the field of information technology, ECD's Ovonic phase-change erasable optical memory technology is rapidly becoming the international choice of major optical memory disk manufacturers. ECD's licensees in this area include, among others, Matsushita Electric Industrial Co., Ltd., Hitachi, Ltd., Plasmon PLC and Toray Industries, Inc.