Valence Technology Embarks Upon Manufacturing Expansion to Meet Anticipated Demand for its Lithium Phosphate Battery Packs

  
    
  
  
    
      Valence Technology, Inc. (NASDAQ: VLNC) today announced it plans to 
      increase the company’s manufacturing capacity 
      to meet anticipated demand for its safe, industry-leading Lithium 
      Phosphate energy storage systems. By March 31, 2009, Valence plans to 
      have in place an expanded manufacturing capacity of $35 million to $50 
      million per quarter to support anticipated product sales. As the company’s 
      manufacturing capacity expands, Valence believes it can achieve gross 
      margins of approximately 30 percent of revenue with operating profit 
      from 17 percent to 20 percent of revenue.
    
    
      Valence recently announced it had secured an agreement with Tanfield 
      Group Plc that will result in the purchase of up to $70 million of 
      product during the first phase of the contract to power zero emission, 
      all-electric commercial delivery vehicles. The Valence battery systems 
      are being installed in leading-edge vans and trucks produced by Tanfield’s 
      UK-based trading division, Smith Electric Vehicles, the world’s 
      largest manufacturer of electric vans and trucks.
    
    
      “Increasing our capacity to manufacture 
      additional battery systems will assure we have the capability to fulfill 
      the anticipated demand we believe to be building in our sales pipeline,” 
      said Robert L. Kanode, CEO and president of Valence Technology. “And, 
      with operational full service fulfillment centers in Europe, North 
      America and China we are ready to provide the service and support our 
      customers need.”
    
    
      About Valence Technology, Inc.
    
    
      Valence Technology developed and markets the industry's first 
      commercially available, safe, large-format family of lithium phosphate 
      rechargeable batteries. Valence Technology holds an extensive, worldwide 
      portfolio of issued and pending patents relating to its lithium 
      phosphate rechargeable batteries, the only intrinsically safe lithium 
      rechargeable battery. The company has its headquarters in Austin, Texas, 
      and facilities in Las Vegas, Nevada, Mallusk, Northern Ireland 
      and Suzhou, China. Valence is traded on the Nasdaq Capital Markets under 
      the ticker symbol VLNC and can be found on the internet at www.valence.com.
    
    
      Safe Harbor Statement
    
    
      This press release contains forward-looking statements within the 
      meaning of the Private Securities Litigation Reform Act of 1995, 
      including our statements that we are positioned to realize better 
      execution, improve gross margins, continue to reduce production costs 
      and expenses, realize a strong year in both customer orders and revenue 
      and our financial guidance. Actual results may vary substantially from 
      these forward-looking statements as a result of a variety of factors. 
      Among the important factors that could cause actual results to differ 
      are: the impact of our limited financial resources on our ability to 
      execute on our business plan and the need to raise additional debt or 
      equity financing to execute on that plan; our uninterrupted history of 
      quarterly losses; our ability to service our debt, which is substantial 
      in relationship to our assets and equity values; the pledge of all of 
      our assets as security for our existing indebtedness; the rate of 
      customer acceptance and sales of our products; the continuance of our 
      relationship with a few existing customers, which account for a 
      substantial portion of our current and expected sales in the upcoming 
      year; the level and pace of expansion of our manufacturing capabilities; 
      the level of direct costs and our ability to grow revenues to a level 
      necessary to achieve profitable operating margins in order to achieve 
      break-even cash flow; the level of our selling, general and 
      administrative costs; any impairment in the carrying value of our 
      intangible or other assets; our execution on our business strategy of 
      moving our operations to Asia and our ability to achieve our intended 
      strategic and operating goals; the effects of competition; and general 
      economic conditions. These and other risk factors that could affect 
      actual results are discussed in our periodic reports filed with the 
      Securities and Exchange Commission, including our Report on Form 10-K 
      for the year ended March 31, 2007, 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.