EXHIBIT 10.68
                  DEVELOPMENT AGREEMENT AND
                  AGREEMENT FOR PURCHASE OF
                   MACHINERY AND SUPPLIES

      This Agreement is made this 1st day of November,  1995
by  and between Electrosource, Inc. ("ELSI") and Charles  L.
Mathews ("Contractor").

      Whereas, ELSI produces lead-acid batteries ("Horizon")
with  patented  technology developed in part by  Contractor,
and  ELSI  wishes  to  arrange for  the  supply  of  certain
equipment  and  supplies from Contractor for its  facilities
and potentially for its licensees and affiliates, and

      Whereas, contractor wishes to develop and supply  such
equipment and materials to ELSI,

      Now,  therefore, for good and valuable  consideration,
the  adequacy  which  is acknowledged, ELSI  and  Contractor
agree:

     1.    Contractor agrees to sell to ELSI and ELSI agrees
     to  purchase  from  Contractor, machines  to  make  co-
     extruded    wire   ("Co-extruders"),   with   necessary
     attachments.   The  Co-extruders will  be  for  use  in
     present and anticipated ELSI production facilities  and
     will be purchased as and when deemed necessary by ELSI.
     Alternatively, Contractor and ELSI may agree to a lease
     arrangement  for  the Co-extruders in  addition  to  or
     instead of sales.

     2.    ELSI hereby grants rights to manufacture the  Co-
     extruders to Contractor for the term of this Agreement,
     so   long  as  the  supply  of  Co-extruders   is   not
     interrupted   and   the   Co-extruders   meet    ELSI's
     requirements for quality, quantity and timely delivery,
     as   specified  in  writing  in  advance  by  ELSI  and
     Contractor.

     3.    Quantities,  prices  and payment  terms  for  Co-
     extruders  shall be agreed upon for the following  year
     at least two (2) months before the end of each calendar
     year, or at such other time or times as the parties can
     best  determine, and shall be evidenced by  a  detailed
     purchase  order.  ELSI will advance 50% of the purchase
     price to Contractor for each such Co-extruder it agrees
     to purchase, with the advance to be made at the time or
     times necessary to maintain delivery schedules.  Prices
     shall  be  negotiated  in good-faith,  based  upon  the
     actual  cost  of the Co-extruders and the  availability
     and  price of competing products.  Currently, the price
     to  the  Company from Contractor for a single head  Co-
     extruder is expected to be $110,000.

     4.    Contractor shall warrant the Co-extruders against
     defects  in materials and workmanship for at least  one
     year.   The  machines and components shall be  new,  of
     good   quality  and  fit  for  the  particular  purpose
     intended,   with  guaranteed  rates  of   thru-put   by
     Contractor.  Finished wire specifications  will  be  as
     agreed upon in advance from time to time.

     5.   Contractor shall also continue development work on
     Co-extruders  and such other equipment,  processes  and
     methods  as  ELSI  shall reasonably request  hereunder.
     Contractor shall review the substance and direction  of
     his  work  hereunder with the President of ELSI  on  at
     least quarterly intervals.

     6.    ELSI  also  agrees  to  pay  contractor  for  the
     development  of an automated billet maker, which  shall
     belong  exclusively  to ELSI as will  all  intellectual
     property  rights  thereto.  The  billet  maker  may  be
     located  on Contractor's premises for the term  of  the
     agreement or at such other location as ELSI may direct.
     Contractor shall have the right to manufacture and  use
     such billet makers for supply of billets exclusively to
     ELSI, provided the Contractor remains ready and able to
     make  billet  makers and billets of acceptable  quality
     and  quantity  on  a timely basis at a  cost  which  is
     reasonable  and competitive.  ELSI shall pay Contractor
     $65,000  hereunder for development of the billet  maker
     and other development work hereunder, to be paid at the
     rate  of  $3,611  per month for eighteen  (18)  months,
     payments  to  be made on the 1st and 15th day  of  each
     month.   The development cost of $65,000 shall  include
     all related costs, including taxes, labor, engineering,
     drawings,  etc.   The price of the first  billet  maker
     shall be an additional $60,000 as will be detailed in a
     purchase  order  to  be  issued at  the  discretion  of
     Electrosource.  The development work and  billet  maker
     price shall include:

       a.  A new fully automatic lead billet maker.

       b.  An  automatic  shear  mechanism  integrated
           with the billet maker to make billets, shear  the
           ends and place the billets on a pallet.

       c.  All engineering drawings.

     ELSI shall pay $30,000 as a down payment for the billet
     maker  upon  issuance  of  a purchase  order,  and  the
     balance  in  monthly installments, as detailed  therein
     and  agreed  upon by Contractor.  After development  of
     the  initial automated billet maker, Contractor  agrees
     to  manufacture  and sell additional billet  makers  to
     ELSI  at  a  price  $60,000  each,  including,  without
     limitation, installation and taxes.

     7.    Contractor shall also supply lead billets to ELSI
     in the quantities and on the dates as required by ELSI,
     provided  that the supply of lead billets by Contractor
     is  not interrupted and the specifications as agreed in
     writing  in advance are met.  Purchases from Contractor
     shall begin as soon as reasonable after the date hereof
     based  upon  a  trial  program  to  begin  as  soon  as
     possible.   The  price for the lead  billets  shall  be
     competitive  with  other sources of  supply,  with  the
     current  pricing being the cost of lead plus  $.30  per
     pound, which shall be reduced to the price of lead plus
     $.24  per  pound, or market rates as adjusted at  least
     yearly, after development of the automated billet maker
     provided  for above.  It is anticipated that ELSI  will
     continue to purchase the lead directly and supply it to
     Contractor for the making of billets, in which case the
     cost  of  lead  would not be included  in  Contractor's
     billings.

     8.    The  term of this Agreement shall begin upon  the
     date hereof and continue for a period of two (2) years,
     unless  sooner terminated in accordance with its terms.
     The  Agreement  may  be  extended  by  mutual  consent.
     Neither  party may terminate this Agreement except  for
     cause,  and  after thirty (30) days written  notice  of
     default, provided the default is not cured during  such
     thirty (30) day period.

     9.    ELSI shall own all inventions or improvements  to
     inventions   made  by  Contractor  pursuant   to   this
     Agreement.   At  termination, and  otherwise  upon  the
     request  of  ELSI, Contractor will assign to  ELSI  any
     such  inventions  or improvements and  shall  cooperate
     fully with ELSI on any patent applications.

     10.  Each party shall hold all confidential information
     disclosed  to it by the other during the term  of  this
     Agreement in confidence and not disclose it or  use  it
     (except  for this Agreement) without the prior  written
     consent of the other.

     11.  This Agreement may not be assigned by either party
     without the prior written approval of the other,  which
     may be withheld for any reason.

     12.   Contractor is an independent contractor, and  not
     the   employee   or  agent  of  ELSI.   Contractor   is
     responsible for his own insurance and taxes.

     13.   Contractor  hereby agrees to indemnify  and  hold
     ELSI  harmless from and against any and all  claims  or
     litigation,  damages, costs or attorney fees  resulting
     from  Contractor's negligence or willful misconduct  in
     the performance of this contract.

     14.  Notices may be given to Contractor at:  Charles L.
     Mathews, 111 Cardinal Drive, Page, Texas 78629, and  to
     ELSI  at:  Electrosource, Inc., 3800-B Drossett  Drive,
     Austin, Texas 78744-1131.

     15.  This Agreement shall be construed, interpreted and
     enforced under the laws of Texas.

      IN  WITNESS  WHEREOF, the Parties have  executed  this
Agreement as of this 1st day of November, 1995.

CONTRACTOR                         ELECTROSOURCE, INC.


By:         /S/                    By:     /S/
   Charles L. Mathews                 James M. Rosel
                                      Vice President, General Counsel