Ener1 Chairman's Letter to Shareholders

    FT. LAUDERDALE, Fla., Jan. 31 /PRNewswire-FirstCall/ -- Ener1 Inc
 (OTC: ENEI) Chairman Charles Gassenheimer today issued the following letter to
 shareholders and interested members of the investment community.
 
 
 
     Dear Shareholder,
 
     The new management of Ener1 Inc, led by myself, Charles Gassenheimer, as
     Chairman and Ron Stewart, Interim CEO, General Counsel and co-author of
     this letter, is focused on the introduction of products uniquely
     differentiated in a demanding market.  We are leveraging our resources to
     accelerate the commercialization of our technologies.  We believe these
     technologies provide efficient, affordable and viable non-polluting fuels
     for today's and tomorrow's transportation needs.
 
     Lithium-ion batteries for HEVs
     We believe that our EnerDel group is on the leading edge of a breakthrough
     in the battery business for the hybrid electric vehicle (HEV) market.
     EnerDel is now testing manufactured prototypes of battery cells and
     related manufacturing equipment.
 
     We believe that our HEV lithium-ion batteries will be the first of their
     kind to be mass manufactured in the United States for automotive use.
     ITOCHU Corporation is our ally in our lithium-ion R&D program through its
     contribution of Japanese scientists and engineers with proven hands-on
     experience developing and mass manufacturing batteries for the world's
     major lithium-ion battery manufacturers.
 
     The increasing market for hybrid cars has become apparent.  According to
     an article in the current edition of MOTOR TREND (Jan 25, 2006), estimates
     for hybrid car sales in the United States in 2006 are about 300,000,
     estimated to rise 33% to 400,000 in 2007.  We expect that our lithium-ion
     batteries will provide better power output than current technologies and
     be recyclable (and easily interchangeable as to size and design),
     providing a distinct advantage over existing nickel metal hydride HEV
     batteries.
 
     Hydrogen fuel cells
     We have also made progress in our fuel cell operations.  EnerFuel is
     focused on developing a new generation of hydrogen fuel cells that provide
     power for remote locations and supply back-up power in all sorts of
     applications.  The EnerFuel group has been augmented by our acquisition of
     a talented group of engineers and technicians in the fuel cell industry.
     We have also acquired a state-of-the-art R&D facility for fuel cell work
     located close to our headquarters.  These developments further our
     business strategy that originally contemplated the acquisition of Giner
     Electrochemical Systems (that acquisition was not made).  We expect to
     produce early commercial versions of our first fuel cell products in 2007.
     We are moving forward with the Florida Hydrogen Initiative project, funded
     by the U.S. Department of Energy.
 
     We believe that our lithium battery and fuel cell technologies will reduce
     emissions of greenhouse gases and our dependence on foreign sources of
     energy.  We see our mission as developing superior batteries and fuel
     cells that are cost-efficient, affordable, and dependable and as close to
     completely neutral environmentally as possible.
 
     As Chairman of Ener1, the company's capital formation is my personal
     responsibility.  I intend to address the balance sheet adroitly.  With the
     knowledge that $70 million has been invested to date, I am confident we
     will establish a viable entity for all stakeholders.
 
     Our former management announced their intention to spin off some
     operations; that intention is not embraced by our current management.
     Do not expect that we will spin out any of our operations in the near
     future as our leadership believes that it is not sensible or feasible in
     light of the mutual interdependence of each company.
 
     Our new operational leadership will address Ener1's need for stability.
     Gerard Herlihy has joined us from a sister company as our new CFO.  Our
     operations will be managed by Executive Vice President Ulrik Grape, who is
     President of our EnerDel group; and by newly named Executive Vice
     President Rex Hodge, President of our EnerFuel group.  Both are
     professionals with strong credentials who have experience commercializing
     lithium batteries and fuel cells.  Clearly, the development and marketing
     of our products requires a practical and professional operations group
     that is now being assembled.
 
     We have the advice and counsel of Marshall S. Cogan, who will serve on our
     Board, and whose experience, knowledge of financial markets, and network
     within the automotive and other industries may be constructive.
 
     We believe that 2006 will usher in the launch of commercialization of our
     products and should be a turning point for our company.
 
     Sincerely,
 
     Charles Gassenheimer, Chairman
     Ronald Stewart, Interim Chief Executive Officer and General Counsel
 
 
 
     About Ener1, Inc.
     Ener1, Inc (OTC Bulletin Board:   ENEI) is an alternative energy technology
 company.  The company's interests include: 80.5% of EnerDel (www.enerdel.com),
 a lithium battery company in which Delphi Corp. owns 19.5%; 49% of Enerstruct,
 a Japanese lithium battery technology company in which Ener1's strategic
 investor ITOCHU owns 51%; wholly owned subsidiary EnerFuel, a fuel cell
 testing and component company (www.enerfuel.com); and wholly owned subsidiary
 NanoEner, which develops nanotechnology-based materials and manufacturing
 processes for batteries and other applications (www.nanoener.com).  For more
 information, visit http://www.ener1.com.
 
     Safe Harbor Statement
     This release contains forward-looking statements within the meaning of the
 Federal Private Securities Litigation Reform Act of 1995 conveying
 management's expectations as to the future based on plans, estimates and
 projections at the time the statements are made.  The forward-looking
 statements contained in this press release involve risks and uncertainties,
 including, but not necessarily limited to: EnerDel's ability to succeed as a
 supplier of batteries to the hybrid electric vehicle and other markets;
 Ener1's plans to reduce costs and gain a competitive advantage by
 consolidating manufacturing operations and implementing automated production
 processes; charges Ener1 will incur in connection with consolidating
 manufacturing operations; the degree of competition in the markets for lithium
 battery, fuel cell and nanotechnology-based products and services, Ener1's
 history of operating losses, the lack of operating history for the development
 stage Ener1 businesses, the need for additional capital, the dependency upon
 key personnel and other risks detailed in Ener1's annual report on Form 10-KSB
 for the year ended December 31, 2004, as well as in its other filings from
 time to time with the Securities and Exchange Commission.  These risks and
 uncertainties could cause actual results or performance to differ materially
 from any future results or performance expressed or implied in the forward-
 looking statements included in this release.  Ener1 undertakes no obligation
 to publicly update or revise any forward-looking statements, whether as a
 result of new information, future events, or otherwise.
 
      Contact:  Joe Allen (investors)             Alys Daly
                Allen & Caron Inc                 Ener1, Inc.
                212 691 8087                      954 202 4442 or 305-815-0312
                joe@allencaron.com                adaly@ener1.com
 
 

SOURCE Ener1, Inc.

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