An anonymous director reports

ELECTROVAYA PROVIDES BUSINESS UPDATE

Electrovaya Inc. is providing the following update on business developments previously disclosed by Electrovaya. Some of the items herein were described in the press release of Electrovaya dated Oct. 19, 2016, and are being restated for completeness in one document. This press release is being issued by Electrovaya in connection with a disclosure review undertaken by the Ontario Securities Commission in connection with the filing by Electrovaya of a preliminary short-form base-shelf prospectus dated Sept. 21, 2016.

On May 26, 2016, Electrovaya announced the signing of a master service agreement with a Fortune 1000 New York Stock Exchange-listed company and estimated potential revenues of up to $80-million (U.S.) over a three-year period under such contract (the Hyster-Yale agreement). On July 26, 2016, Electrovaya issued a press release announcing that it had commenced receiving purchase orders under the Hyster-Yale agreement. On Sept. 15, 2016, Electrovaya issued a press release, which identified the customer as Hyster-Yale, a leading electric forklift manufacturer. The forward-looking estimated revenue and volumes disclosed by Electrovaya in its earlier press releases were based upon the customer's expectations and forecasts for end customer sales of new lithium-ion forklift products. Electrovaya's estimated revenue from the customer is dependent on the customer's ability to generate sales of its lithium-ion-based forklifts and to order products from Electrovaya in connection with such sales. The Hyster-Yale agreement does not provide for a minimum contracted volume nor have firm irrevocable commitments been obtained from the customer. As with any new program, Electrovaya is in the ramp-up and prototyping phase under the Hyster-Yale agreement, and accordingly, the amount of orders placed under the Hyster-Yale agreement to date is deminimis. However, as previously disclosed by Electrovaya, Electrovaya expects that sales under the Hyster-Yale agreement will accelerate over calendar year 2017 once the initial ramp-up phase under the Hyster-Yale agreement is completed.

On June 14, 2016, Electrovaya announced a non-binding memorandum of understanding with a European original equipment manufacturer, a battery assembler for electric buses, which has manufacturing plants in both Europe and China. Electrovaya and the potential customer are engaged in negotiations toward a definitive agreement. The MoU contains certain indicative fundamental terms (price and maximum volume discount) agreed by the parties. The MoU is for a product that is not a standard product of Electrovaya, and accordingly, Electrovaya is currently engaged in the production of prototype products for this potential customer to be in a position to execute a definitive agreement once terms are agreed on. Electrovaya anticipates the definitive agreement will be consistent with the indicative fundamental terms contained in the MoU; however, there is no assurance a binding agreement will be entered into or, if entered into, will be on the terms contained in the MoU. The forward-looking potential estimated revenues of 11 million euros for 2017 previously disclosed by Electrovaya were based upon the customer's expectations regarding end customer sales of the product. Neither the MoU nor any definitive agreement is expected to provide for a minimum contracted volume or firm irrevocable commitment.

On July 6, 2016, Electrovaya/Litarion announced a non-binding MoU, with an international original equipment manufacturer. The MoU contains certain indicative fundamental terms (price and maximum volume discount) agreed to by the parties. A working group has been set up with key personnel from both organizations to collaborate on specification, development, prototyping and testing. Electrovaya anticipates that the definitive agreement will be consistent with the MoU; however, there is no assurance a binding agreement will be entered into or, if entered into, will be on the terms contained in the MoU. Development work is being done by both sides, and commercialization is expected to start in calendar year 2017. If a definitive agreement is executed, Electrovaya would be a supplier to the international OEM's electric vehicle, and the actual revenues of Electrovaya will be dependent on the success of the international OEM's electric vehicle in the market and the international OEM ordering the products of Electrovaya. Neither the MoU, nor it is expected that any definitive agreement will provide for a minimum contracted volume or firm irrevocable commitment. The international OEM has a large internal fleet demand for electric vehicles, as well as external demands. Based upon the customer's expectations regarding end customer sales of the product, Electrovaya's forward-looking potential revenues from this international OEM are estimated to be up to 37 million euros in 2017, with the actual revenues dependent on the international OEM's commercialization of the electric vehicle with Electrovaya's products for both its internal fleet usage and external sales.

On Sept. 20, 2016, Electrovaya announced it signed a service agreement with an NYSE Fortune 1000 OEM. This service agreement is for the design and development of battery modules for a range of the NYSE Fortune 1000 OEM's electromobility products. Volume manufacturing and commercial production are subject to Electrovaya and the NYSE Fortune 1000 OEM entering into a definitive supply agreement and the customer providing Electrovaya with orders thereunder. Accordingly, there is no assurance that large-volume commercial production will start in late 2017.

On Oct. 19, 2016, Electrovaya announced that it entered into a strategic supplier agreement and a supply agreement with a global original equipment manufacturer. The agreements follow the earlier announced letter of intent in June, 2016. Electrovaya will supply 48-volt Litastore battery modules to the Global OEM if, as and when the global OEM delivers purchase orders under the agreements. Prior to the execution of the agreements, Electrovaya completed, shipped and billed the global OEM for prototypes delivered by Electrovaya. The agreements contain tiered volume and pricing. Should the forward-looking maximum volume anticipated in the volume pricing schedule be achieved, this would result in 199 million euros being the potential value of the agreement over a three-year period. There is no assurance, however, that the global OEM will order, nor Electrovaya supply to this extent. On Oct. 31, 2016, Electrovaya received from the global OEM a 6.9-million-euro purchase order for delivery of battery modules in the first half of 2017.

With the introduction of Electrovaya's new battery module, Litacore1000, as announced by Electrovaya on May 16, 2016, Electrovaya's focus moved from component sales to battery module and system sales, as indicated in the Aug. 11, 2016, third quarter financial results announcement. This change in focus, accompanied by deferral of deliveries for battery components requested by customers, as noted in management's discussion and analysis of Electrovaya for the quarter ended June 30, 2016, resulted in a decrease in the third quarter ended June 30, 2016, revenue and also impacted future revenue from two contracts previously announced.

With respect to the lithium-ion product supply contract announced by Electrovaya on Sept. 1, 2015, Electrovaya estimated on such date that the value over the life of the contract (being three years and eight months) to be 18.5 million euros, based on the orders under the battery component contract advised by the customer. From Sept. 1, 2015, to June 30, 2016, Electrovaya recorded 1.7 million euros of revenue under the battery component contract. However, as noted in management's discussion and analysis of Electrovaya for the quarter ended June 30, 2016, the customer requested a deferral of deliveries under the battery component contract. Following this request for deferral, Electrovaya and the customer amended the battery component contract to include a firm commitment by the customer to order 1.3 million euros of products prior to September, 2017, and provide the customer an option to order additional products above this committed amount. This deferral of the firm orders may have a material and adverse impact on the future optional orders, if any, under the contract. As the customer has not provided a revised forecast of orders to Electrovaya, Electrovaya is not at this time able to provide an updated estimate as to the value of the remaining potential orders under the battery component contract, nor is there any assurance Electrovaya will accept such orders if received. Electrovaya's estimated revenue from the customer is dependent on the customer's ability to generate sales to its customers.

With respect to the lithium-ion-cell purchase order announced by Electrovaya in January, 2016, Electrovaya received a purchase order from a North American distributor for approximately $16-million (U.S.) with deliveries through to March, 2017. From Jan. 1, 2016, to June 30, 2016, Electrovaya recorded $1.6-million (U.S.) of revenue under the purchase order. However, as noted in management's discussion and analysis of Electrovaya for the quarter ended June 30, 2016, the customer requested a deferral of further deliveries with no time frame specified. This deferral of the firm orders may have a material and adverse impact on the future orders, if any, under the contract. There is no assurance further deliveries will be requested nor accepted by Electrovaya if a request is received.

Electrovaya announced on June 2, 2015, that it had received an order for Separion from a leading Chinese battery company. This order was fulfilled; however, Electrovaya subsequently determined that Separion provided it with a key competitive advantage in terms of safety and cycle life. As such, no further orders for Separion were accepted, nor is it likely any will be accepted as Electrovaya pursues a strategy to keep Separion proprietary to its own products.

Electrovaya also announces that it filed material change reports today with respect to its press releases dated July 26, 2016, and Sept. 20, 2016.

Electrovaya is also clarifying certain information which was contained in its previously filed annual information form dated Dec. 1, 2015.

The order to supply prototype battery packs for DongFeng Motors in China (announced by Electrovaya on Jan. 15, 2013) was completed, and Electrovaya does not expect any future revenues from DongFeng Motors.

Electrovaya had a research and demonstration program with Chrysler, which was partially financed by the U.S. Department of Energy (as announced by Electrovaya on March 24, 2010). The program enabled the development of plug-in hybrid Ram trucks and minivans, where Electrovaya supplied the complete battery system. Chrysler did not pursue the commercialization of this project, and Electrovaya ceased work on this project.

In mid- to late November, 2016, Electrovaya will be filing an amended and restated annual information form dated Dec. 1, 2015, to, among other things: (i) satisfy form requirements, (ii) clarify certain disclosure in the prior annual information form, including removing outdated or unnecessary disclosure, (iii) include appropriate guidance regarding forward-looking statements, and (iv) include appropriate risk factors.

About Electrovaya

Electrovaya designs, develops and manufactures proprietary lithium-ion superpolymer batteries, battery systems and battery-related products for energy storage, clean electric transportation and other specialized applications. Electrovaya, through its fully owned subsidiary, Litarion GmbH, also produces cells, electrodes and Separion ceramic separators and has manufacturing capacity of about 500 megawatt-hours per annum. Electrovaya is a technology-focused company with extensive patents and other intellectual property.

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