China BAK Funded by National 863 Program for its Electric Vehicles Battery Project

SHENZHEN, China, December 29, 2008: China BAK Battery, Inc. ("China BAK", or "BAK"), one of the largest lithium-ion battery cell manufacturers in the world, as measured by production output, today announced its Electric Vehicles Lithium-phosphate Power Battery Industrialization Project (the "Project") has been selected as a key project of the PRC's National High Technology Research and Development Program, or "863 Program", by the PRC's Ministry of Science and Technology. Under expected terms of the official election, China BAK will receive a grant of up to $3.1 million from the PRC's central government and certain subsidy grants, amount to be determined, from the Shenzhen Municipal Government in coming quarters.

BAK International (Tianjin) Limited, China BAK's wholly-owned subsidiary, which focuses on the R&D, manufacturing and distribution of advanced high-power lithium-phosphate cells, will lead the commercialization of the Project. It aims to commercialize the production of high-power lithium-phosphate cells for use in light electric vehicles and hybrid electric vehicles.

The 863 Program is one of the most important national science and technology programs in China. It was launched in March 1986 by the PRC's central government as a national strategic development program to optimize and upgrade China's hi-tech development in the key fields of IT, biology, energy, agriculture, pharmaceutical, new material, manufacturing and automation, as well as resource and environment. The selection process for 863 Program is highly rigorous and competitive.

China BAK has many years of experience in the R&D, manufacturing and distribution of high-power lithium-phosphate cells. It began commercial production of lithium-phosphate cells at its Shenzhen facility for use in cordless power tools in October 2005, and for mining lamps in March 2007. In December 2006, its new subsidiary, BAK International (Tianjin) Limited, was incorporated to focus on the R&D, manufacturing and distribution of lithium-phosphate cells. China BAK has since shifted all lithium-phosphate cell manufacturing machinery, equipment and personnel from its Shenzhen facility to its Tianjin facility. In October 2008, its Tianjin facility completed construction of its first lithium-phosphate cell production line, and initiated trial production of lithium-phosphate cells. It has also been engaging in the research and development of lithium-phosphate cells for use in light electric vehicles and hybrid electric vehicles, and has been actively seeking market opportunities for such applications.

"To be selected to participate in the 863 Program, a symbol of high technology in China, will further enhance our reputation as a hi-tech battery manufacturer and increase our customers' trust in our products. It is a great opportunity for BAK to commercialize its high-power lithium-phosphate cells production by seeking cooperation and leveraging supply chain in the industry," commented Xiangqian Li, CEO of China BAK.