Valence Applies for Federal Grant to Construct Advanced Battery Production Facility

Proposed Central Texas Plant Potentially Online in 2012 with Expected Full
Operational Capacity by 2016 Providing up to 4,000 Jobs
AUSTIN, Texas--(Business Wire)--
Valence Technology, Inc. (NASDAQ: VLNC), a leading U.S.-based manufacturer and
supplier of lithium iron magnesium phosphate energy storage solutions, today
announced it has submitted a grant application to the U.S. Department of Energy
under the Electric Drive Vehicle Battery and Component Manufacturing Initiative.
This initiative supports the construction of facilities to manufacture advanced
battery technology components for electric vehicles. The company`s proposed
facility would manufacture lithium phosphate cathode material, high-capacity
advanced cells and battery packs for electric drive vehicles and other
applications.

Valence submitted its application requesting $225 million in federal grant funds
over a three-year period and plans to fund the remaining $359.4 million (61.5%
of the total project costs) through state and local tax and other incentives.
The annual production capacity of the proposed facility is estimated to be
660,000 battery packs or more than one million kilowatt hours (kWh) of
equivalent available energy and can be online as early as August 2012. This
grant application is a separate request from the Company`s March loan
application under the Advanced Technology Vehicles Manufacturing Incentive
Program (ATVMIP). Funds under both programs are available to qualified
companies.

"Our recent grant proposal includes an aggressive construction plan for
manufacturing capacity that exceeds the Department of Energy specifications,"
said Ross Goolsby, Valence Chief Financial Officer. "We can put this
manufacturing plant online in the U.S. and begin production quickly because
after 20 years in business we already possess the manufacturing know-how,
comprehensive intellectual property portfolio, next-generation technology and
experience needed to deliver results and generate new jobs."

Funds totalling $2 billion for grants under this initiative have been
appropriated under the American Recovery and Reinvestment Act of 2009, which
aims to stimulate the economy and create new American jobs by specifically
utilizing renewable energy technologies that will shift the nation to a
low-carbon economy.

"Texas knows energy and as a United States public corporation we appreciate
Texas` determination to become the leader of the next energy evolution. Valence
Technology wants to put that expertise to work with this grant. We`ve already
demonstrated our manufacturing capability overseas and know we can bring our
technology and manufacturing expertise to Texas, putting more Americans to work
sooner rather than later with safe lithium phosphate technology," said Robert L.
Kanode, Valence President & CEO.

"We`re pulling together infrastructure and suppliers to rally around our high
quality, proven battery systems. The multiplier from our success will mean
success for the region, attracting industries with next generation
technologies.Valence Technology already has the capabilities to produce and
deliver large-format energy solutions for electric drive vehicles, hybrids and
other applications. Funds from this grant are important to ensure advanced
battery jobs and advanced technologies grow and thrive on U.S. soil," continued
Kanode.

"With significant incentives projected from the state, county and city
governments, Leander, Texas, was chosen as the primary site for our advanced
battery manufacturing plant," added Goolsby. "Both State and City officials have
demonstrated incredible support for the plan to provide up to 2,700 new,
high-tech jobs in the Central Texas region by 2012 and up to 4,000 jobs by 2016.
The State of Texas, Williamson County and the City of Leander are projecting and
seeking approval of more than $150 million in incentives over a ten-year
period."

This past March, Valence Technology submitted an application to the Department
of Energy`s Advanced Technology Vehicles Manufacturing Incentive Program for low
interest loans to help finance the construction of this new world-class lithium
iron magnesium phosphate battery manufacturing facility.

About Valence Technology, Inc.

Valence Technology is an international leader in the development of lithium
phosphate energy storage solutions. The company has redefined lithium battery
technology and performance by marketing the industry`s first safe, reliable and
rechargeable lithium iron magnesium phosphate battery. Celebrating 20 years in
business, Valence today offers a proven technology and manufacturing
infrastructure that delivers ISO-certified products and processes that are
protected by an extensive global patent portfolio. Headquartered in Austin,
Texas, Valence has facilities in Nevada, China and Northern Ireland. Valence is
traded on the NASDAQ Capital Market under the ticker symbol VLNC. For more
information, visit http://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. Actual results may vary
substantially from these forward-looking statements as a result of a variety of
factors. The application for loans under the DOE`s ATVMIP and the application
for grant funding under the DOE`s Electric Drive Vehicle Battery and Component
Manufacturing Initiative may not result in any such loans or grants being
granted. The 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, 2008, 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.

IR Contact:
Pierpont Investor Relations
A. Pierre Dubois, 512-527-2921
investor@valence.com
or
PR Contact:
AllynMedia
Jennifer Ring, 214-871-7723
jring@allynpartners.com

Copyright Business Wire 2009