Dear Shareholders;

Ener1 Inc is entering an exciting phase of commercialization of products based upon its proprietary technology. The Company is developing commercially viable solutions to the world's growing appetite for energy at a time when the population is faced with increasing concerns over the deteriorating environment and global warming caused by the use of fossil fuels. Using science and technology to solve society's energy problems by providing environmentally friendly and commercially profitable solutions is fundamental and central to the Company's mission. This exciting phase is going to witness commercial products rolling out in the commerce stream.

For the first time in the last 30 years political, industrial and consumer interests in supporting increasing fuel efficiency for transportation are aligned. A recent article in the New York Times reported, "With gasoline above $3 a gallon… (political forces) are pushing for increases in fuel economy… (that) the automakers are now backing." The Auto Industry has embraced and is gearing to scale up hybrid car production; Congress is pushing to allocate significant federal funding to accelerate battery development efforts. Ener1 Inc is well positioned to take advantage of this political and commercial environment and play a leading role to serve the industry by offering complete solutions.

Our EnerFuel division is ready to launch its first fully integrated product in the market place during the last quarter of this year. EnerFuel's remote surveillance camera has an operating autonomy in remote application of up to six months. Conventional surveillance cameras weigh 300 pounds more than the EnerFuel camera and have only one week operating autonomy. This surveillance camera will be the best in its class. EnerFuel is also launching its next generation humidifier for fuel cell application that has been tested and fully validated by the user industry.

Our EnerDel division, a joint venture with Delphi has successfully completed its initial product development under the United States Advanced Battery Consortium (USABC) sponsored Phase I funded program. A USABC Phase II development program is underway, which will allow EnerDel to transform its Phase I success in to a fully integrated battery pack system. This will lay the ground work for full validation by OEM's. EnerDel's continued focus on product commercialization with high yield using its US based manufacturing assets puts it in leading position with a unique advantage of product design and strategy protected by a large portfolio of intellectual property. The Company is also taking steps to align its EnerStruct subsidiary to compress the race to markets.

NanoEner, our advanced Nano-Phase materials technology division has demonstrated the use of its proprietary Vapor Deposition Solidification (VDS) process for use in a variety of applications including batteries, capacitors, coatings and other applications. Ability to atomically engineer materials using its VDS process allows it to solve the most intricate materials related technical problems.

Prior to joining the Company as President I had an opportunity to do a global survey and assessment of Li-Ion battery technology for hybrid electric vehicle application. While there are a number of contestants working on developing a perfect solution, I found that Ener1's approach was most impressive. This in part was my reason to associate myself with a company that holds the key to the enabling technology and product design strategies for the explosive growth that HEV industry is about to experience. Ener1 with its strategic platforms in advanced batteries, fuel cells and components, its manufacturing alliance in EnerStruct and its advanced materials science capability in NanoEner is uniquely positioned to win the race.

The market forces are ripe for the products the company is developing and preparing for commercialization. While most technology driven companies tend to be ahead of their time, Ener1 Inc has positioned and aligned itself to serve the market in time to bring the maximum value to its shareholders and stakeholders.

The Company has adapted an aggressive campaign to get its message out to the market and investor constituencies. Our presentations and display at the recent Advanced Battery Conference held in Long Beach California was a great success resulting in recognition and business prospects. We are planning a major marketing event at the upcoming leading industry conference EVS-23 in December this year.

I am pleased to announce that at such a crucial time for Ener1, we have received a commitment from the Company's primary shareholder to fund the company through the next 180 days. This removes any uncertainty related to funding and allows us to focus on achieving near-term milestones. Our principal shareholder's commitment puts us on an automotive scale commercialization path necessary in the automotive industry.

I am proud to have an opportunity to lead a group of dedicated and talented colleagues and associates at Ener1 Inc to new commercial heights. In these exciting times of huge business opportunities in the field of alternative energy, we are on the verge of seeing the fruits of patience and commitment of our shareholders as well as the hard work of our colleagues and associates.

Subhash Dhar
President