Will Use Mothballed Production Lines in New Castle Factory to Jump Start Revenue

NEW CASTLE, Pa., Nov. 5 /PRNewswire-FirstCall/ -- Axion Power International, Inc. (OTC Bulletin Board: AXPW), a leading developer of battery technologies and advanced energy storage devices, announced today that it has received a purchase order for 92,250 flooded lead-acid batteries that it will produce over the next 11 months under a toll-manufacturing contract with a major North American battery manufacturer. The purchase order is the first phase of a relationship that could expand to 50,000 units per month by mid 2009. The product will be manufactured on previously mothballed assembly lines in Axion's New Castle plant. Axion will begin work and will ship product this month. This Phase 1 purchase order segment will generate $6.4 million in revenue over the next year.

The original New Castle battery manufacturing equipment that Axion bought in 2006 was configured into two flooded battery lines, and a third line for sealed absorbent glass matt (AGM) batteries. The plant has always had a total permitted capacity of 3,000 batteries per day and Axion has the potential to apply for a permitted increase to 5,000 per day. Over the last three years, Axion made all of its PbC(TM) battery prototypes and specialty racecar and collector car batteries on the AGM line. The flooded battery lines remained in place but unused. When the opportunities for toll contract manufacturing first arose in 2007, Axion began to slowly rehab the flooded production lines, and in some cases upgraded and replaced existing equipment with battery manufacturing equipment obtained at auctions for a fraction of its' real value. This process continued into the first 9 months of 2008.

Axion's primary business focus is developing new manufacturing processes for energy storage devices based on its proprietary PbC technology, which promises to deliver advanced battery performance at a price that approaches lead-acid. Restoring the flooded battery lines to production will not interfere with Axion's PbC activities on the AGM line and should give rise to significant economies of scale and training opportunities for new hires. Axion's CEO Thomas Granville said the new purchase order will help put under-utilized sections of the New Castle plant into production and provide an important source of new revenues to finance ongoing R&D and future growth. The order, along with anticipated follow on orders over the next several months, also serves to complete the terms of the final Quercus Trust investment made in June of 2008.

"This contract is a significant development for Axion," Granville said. "It kicks off a major part of our total business strategy that will generate substantial manufacturing revenue and help us develop new supply chains and build industry relationships while we perfect new manufacturing techniques for energy storage devices based on our disruptive PbC technologies."

About Axion Power International, Inc.

Axion has developed and patented a next generation energy storage device that won the prestigious Frost & Sullivan Technology Award for North America in the field of lead-acid batteries. According to Frost & Sullivan, Axion's new PbC batteries have "the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that is not well suited to the requirements of important new applications like hybrid electric vehicles and renewable power."

Axion Power International Inc. is the industry leader in the field of lead-acid-carbon energy storage technologies. Axion believes this new battery technology is the only class of advanced battery that can be assembled on existing lead-acid battery production lines throughout the world without significant changes to production equipment and fabrication processes. It also believes it will be able to manufacture carbon electrode assemblies in volume at low cost using standard automated production methods that are commonly used in other industries. If and when its electrode manufacturing methods are fully developed, Axion believes it will be able to sell carbon electrode assemblies as virtual plug-and-play replacements for lead-based negative electrodes used by all other lead-acid battery manufacturers. Axion's goal is to become the leading supplier of carbon electrode assemblies for the lead-acid battery industry. For more information, visit http://www.axionpower.com.

    Contact:  Allen & Caron                 Axion Power International Inc.
www.allencaron.com            www.axionpower.com
Rudy Barrio (investors)       Kelly Gubish
r.barrio@allencaron.com       kgubish@axionpower.com
212 691 8087                  724 654 9300
Brian Kennedy (media)