Electric Vehicle Division News

Electric Fuel to Establish New Electric Vehicle Company

— Dedicated Subsidiary Will Work to Commercialize
Zero-Emission Transportation —

May 21, 2001— Electric Fuel Corporation (Nasdaq: EFCX) today announced a plan to form a dedicated Electric Vehicle company. The new wholly-owned subsidiary, to be called Electric Fuel Transportation Corp. (working name), will focus on commercializing Electric Fuel's zero-emission Zinc-Air all-electric hybrid transportation system.

Electric Fuel's Zinc-Air fuel cell technology has been demonstrated in several projects, including in a full-sized transit bus, as being capable of providing fast refueling and a cost-competitive “clean drive range'' of over 250 miles, which the Company believes to be the longest in the industry. Electric Fuel believes that concerns about energy and the environment make this a good time to begin taking concrete steps to commercialize its technology.

Electric Fuel announced that it has begun a worldwide search for a president who can gain the backing of the transportation industry and obtain strategic industrial partners and government support for the intermediate phase program that it is now developing. The Company is also in preliminary discussions with several financial institutions regarding investments that would be earmarked for the new company as a means of unlocking value to shareholders.

The Electric Fuel technology was extensively analyzed in recently concluded studies performed by Bechtel National, Inc. and Arcadis Geraghty Miller, and sponsored by the Electric Power Research Institute, New York Power Authority, the California Air Resource Board, Los Angeles Department of Water and Power, and the South Coast Air Quality Management District. Based on these studies, and in light of today's high fuel costs, Electric Fuel believes that the all-electric Electric Fuel system can be cost-competitive with diesel fuel while offering zero-emission transportation.

Electric Fuel recently kicked off Phase 2 of an FTA-sponsored program to demonstrate and evaluate the all-electric transit bus in a series of test drives in Nevada and New York. During the course of this ongoing testing, Electric Fuel sought to show that the bus, which was developed with funding from the FTA and from the Israel-U.S. Bi-national Industrial Research and Development (“BIRD'') Foundation, meets all operational requirements for a transit bus, including full-day driving range, acceleration, and the ability to operate with power-consuming auxiliary equipment such as air conditioning.

Yehuda Harats, President and CEO of Electric Fuel Corporation, said, “We believe that this is the first viable full-sized zero-emission transit bus ever demonstrated, and also the first that can be commercialized and introduced in transit systems around the country. I believe that with broad-based support we can make a demonstration project of 15-20 transit buses a reality in 2003. In order to work towards this goal, we felt it important to establish Electric Fuel Transportation Corp. as an independent operating entity that can raise capital and attract strategic industrial partners and government support that would be specifically dedicated to the electric vehicle program.''

About Electric Fuel

Electric Fuel Corporation (http://www.electric-fuel.com), with corporate and sales offices in New York and London, England, and manufacturing and R&D facilities in Israel and Alabama, is a world leader in primary and refuelable Zinc-Air fuel cell technology, pioneering advancements in consumer electronics, electric vehicles, and defense and safety products. Electric Fuel's INSTANT POWER(TM) batteries and chargers are based on the Company's patented, cutting-edge Zinc-Air fuel cell technology, and are on sale at retail outlets throughout the United States, Europe and Israel.

Except for the historical information herein, the matters discussed in this news release include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties that may cause actual results to vary significantly. These risks and uncertainties include, but are not limited to, risks relating to: product and technology development; the uncertainty of the market for Electric Fuel's products; development and growth of anticipated markets for Electric Fuel's products; market acceptance of new products and continuing product demand; the ability to manage growth and ramp-up production effectively as needed; the impact of competitive products and pricing on Electric Fuel's products and markets; changing economic conditions; delay, cancellation or non-renewal of purchase orders; significant future capital requirements; and other risk factors detailed in Electric Fuel's most recent annual report on Form 10-K for the fiscal year ended December 31, 2000, and other filings with the Securities and Exchange Commission. Electric Fuel assumes no obligation to update the information in this release. Reference to the Company's website above does not constitute incorporation of any of the information thereon into this press release.