Oxygen Chooses Valence Technology Batteries to Power Electric Scooters; U-Charge(R) Power Systems Enable Longer Range, Higher Re

Oxygen S.p.A., a provider of electric transporters, has
chosen Saphion(R) lithium-ion battery systems from Valence Technology,
Inc. (Nasdaq: VLNC) to power two models of electric scooters. Saphion
technology is the industry's first commercially available, safe,
large-format lithium-ion rechargeable battery technology.
   Oxygen's electric transporters are designed for businesses and
commuters who require reliable and economical transportation that is
both functional and enjoyable. The vehicles are ideal to serve
transportation and delivery needs in congested cities without adding
pollution.
   "We selected Valence's U-Charge Power Systems because they offer
the range, reliability and longevity needed for our electric scooters.
We also like the fact that they require no maintenance and are
environmentally friendly," said Raffaello Locatelli, co-founder and
director of Oxygen S.p.A. "With these batteries, we can offer our
customers clean-running, cost-effective transportation solutions for
personal and commercial use."
   Oxygen will use the U-Charge U1 Power System in its Oxygen E,
which is designed to address the need for low-cost transportation in
congested urban areas, recreational areas such as beaches or resorts,
and restricted communities where gas-powered vehicles are prohibited.
The Oxygen scooters feature advanced technologies, such as brush-less
motor, electronic engine control and regenerative braking to recharge
the battery. The Oxygen Cargo Scooter will use either the U-Charge U1
or U24 Power System, depending on customer's needs. This larger
scooter offers a comfortable ride and excellent handling, has a cargo
box that can be custom designed to store a variety of commodities and
has a range of up to 86 miles. Oxygen vehicles powered by Saphion
batteries will be available starting late this year, with volume
production beginning in first quarter 2006.
   U-Charge Power Systems are based on Valence's Saphion technology.
Its phosphate cathode material is fundamentally safer and more
environmentally friendly than metal-oxide cathode materials. The
performance advantages of traditional lithium-ion coupled with the
safety features of phosphates make Saphion batteries optimal for a
wide variety of motive applications. When compared to other battery
technologies, Valence's Saphion batteries offer the best combination
of performance, safety, cost and reliability.

   About Oxygen S.p.A.

   Oxygen develops, manufactures, markets and distributes
environmentally friendly, technologically advanced light electric and
hybrid vehicles. Its advanced electric transporters compete directly
with gas equivalent products, offering equal to superior overall
performance, while eliminating vehicle fuel consumption and emissions.
Oxygen's commercial vehicles address the needs of postal and parcel
delivery companies, police organizations, food delivery chains, and
traditional and e-commerce retailers. Among Oxygen's customers are the
Milan Police in Italy, Lungta Course in France, and a pizza delivery
chain in the Netherlands. The company's vehicles are currently being
tested by some of the largest postal delivery companies in the world.
Oxygen is headquartered in Padova, Italy and can be found on the
internet at www.oxygenworld.it.

   About Valence Technology, Inc.

   Valence Technology developed and markets Saphion(R) technology,
the industry's first commercially available, safe, large-format
Lithium-ion rechargeable battery technology. Valence Technology holds
an extensive, worldwide portfolio of issued and pending patents
relating to its Saphion technology and lithium-ion rechargeable
batteries. The company has facilities in Austin, Texas, Henderson,
Nevada, and Suzhou and Shanghai, China. Valence is traded on the
Nasdaq SmallCap Market under the symbol VLNC and can be found on the
internet at www.valence.com.

   Safe Harbor Statement

   Some information included in this press release contains
forward-looking statements, within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Act of 1934.
Such statements include information relating to business activities
and project development. These statements can sometimes be identified
by the use of forward-looking words such as "may," "will,"
"anticipate," "estimate," "except," "scheduled," or "intend" and
similar expressions. Such forward-looking information involves
important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results may
differ materially from those expressed in any forward-looking
statements made by or on behalf of Valence. These and other risk
factors that could affect actual results are discussed in Valence's
periodic reports filed with the Securities and Exchange Commission,
including its Report on Form 10-Q for the quarter ended June 30, 2005,
and the reader is directed to these statements for a further
discussion of important factors that could cause actual results to
differ materially from those in the forward-looking statements. The
forward-looking statements included in this press release are made
only as of the date of this release. Valence does not undertake any
obligation to update or supplement any forward-looking statements to
reflect subsequent events or circumstances and cannot assure that
projected results or events will be achieved.