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                                                                 Exhibit 10.22.1
                                                                 ---------------

                   [LETTERHEAD OF ELECTRIC FUEL CORPORATION]


                               January 12, 2001



Dr. Joshua Degani
c/o Electric Fuel Corporation
Western Industrial Park
P.O. Box 641
Beit Shemesh 99000
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Dear Joshua:

               Re:    Your Employment Agreement dated May 13, 1977
                      --------------------------------------------

     In connection with your employment with Electric Fuel Corporation and
Electric Fuel (E.F.C.) Ltd. (together, the "Company"), we wish to amend the
above-referenced employment agreement between you and the Company (the
"Agreement") in certain respects.

     1.   Notwithstanding anything to the contrary in the Agreement, it is
          hereby agreed between us that you will be employed by the Company as
          its Executive Vice President and Chief Operating Officer, and that the
          Company will pay you a base salary that will be the New Israeli Shekel
          equivalent of US$12,000 per month (your "Base Salary"), effective
          January 1, 2001. Your Base Salary will be reviewed and adjusted at the
          end of each calendar year beginning with the calendar year ending
          December 31, 2001 in accordance with the performance of your duties
          over the prior year, but in no event will it be adjusted to less than
          your Base Salary as increased (but not decreased) to reflect any
          increase in the "inflation supplement" (           ) between the date
          hereof and the date of such adjustment. The foregoing is in addition
          to and not instead of all forms of compensation other than salary
          detailed in the Agreement (bonus, stock options, etc.).

     2.   Notwithstanding anything to the contrary in the Agreement, it is
          hereby agreed between us that, in the event we decide to terminate
          your employment other than for cause (e.g., conviction for fraud,
          crimes of moral turpitude or other conduct which reflects on the
          Company in a material and adverse manner, a willful failure to carry
          out a material directive of senior management, or reckless or willful
          misconduct
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          that is materially harmful to the Company), or if your employment is
          terminated by reason of your death or disability, or if you terminate
          your employment under circumstances in which you would be entitled to
          severance pay under Israeli law, we will pay you, in addition to the
          severance pay that you would otherwise be entitled to under Israeli
          law, one year's salary at the highest rate applicable to you at any
          time since May 13, 1977. Alternatively, if you or the Company decide
          to terminate you employment for any reason at any time within one year
          of a Change of Control (as hereinafter defined), we will pay you, in
          addition to the severance pay that you would otherwise be entitled to
          under Israeli law, two years' salary at the highest rate applicable to
          you at any time since May 13, 1997.

          As used herein, a "Change of Control" means (i) the acquisition (other
          than from the Company in any public offering or private placement of
          equity securities) by any person or entity of beneficial ownership of
          twenty (20%) or more of the combined voting power of the Company's
          then outstanding voting securities, or (ii) individuals who, as of
          January 1, 2000, were members of the Board of the Company (the
          "Original Company Board"), together with individuals approved by a
          vote of at least two-thirds (2/3) of the individuals who were members
          of the Original Company Board and are then still members of the Board
          of the Company, cease for any reason to constitute at least one-third
          (1/3) of the Board of the Company, or (iii) approval by the
          shareholders of the Company of a complete winding-up of the Company or
          an agreement for the sale or other disposition of all or substantially
          all of the assets of the Company.

     3.   Further, we are hereby offering you the opportunity to purchase up to
          50,000 shares of our common stock and up to 50,000 warrants to
          purchase shares of our common stock, at a total purchase price of
          $278,125 (based on a closing price per share of our common stock on
          January 12, 2001 of $5.5625 per share), on the following terms and
          conditions:

               (a)  The total purchase price for the shares and the warrants
                    will be $278,125, of which you will pay $500 in cash, and
                    the remaining $277,625 by means of a ten-year, non-recourse
                    promissory note dated January 12, 2001, bearing interest at
                    the Interest Rate.

               (b)  Of the 50,000 warrants, 16,667 warrants shall be warrants to
                    purchase up to 16,667 shares of common stock at a purchase
                    price of $7.5094 per share, expiring on October 12, 2001,
                    and 33,333 warrants shall be warrants to purchase up to
                    33,333 shares of common stock at a purchase price of $8.3438
                    per share, expiring on October 12, 2006. Terms of purchase
                    of common stock pursuant to these warrants shall be similar
                    to the terms of purchase provided for in subparagraph (b)
                    above (i.e., par value in cash and the remainder by ten-year
                    non-recourse note bearing interest at the Interest Rate
                    applicable on the date of exercise of the warrants).

               (c)  You shall provide security for the promissory notes referred
                    to above that shall be adequate under 12 U.S.C. (S) 221 et
                    seq. (Regulation U),
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                    which will include at a minimum all shares of our common
                    stock acquired by you pursuant to this paragraph 4.

               (d)  The proceeds of any sales of the common stock purchased by
                    you hereunder shall be used to reduce proportionally the
                    amount of your outstanding loan from us, principal and
                    interest. For example, if prior to the exercise of any
                    warrants you sell 10,000 shares of the common stock
                    purchased by you hereunder, the proceeds of this sale will
                    be used first to pay down 20% of the original principal and
                    20% of the interest under your loan. Furthermore, we may
                    withhold from such proceeds such amounts for taxes, etc. as
                    we may be required to do under law.

               (e)  Should you leave the employ of the Company prior to January
                    1, 2003 other than by reason of our terminating your
                    employment other than for cause (as defined in paragraph 2
                    above), all securities purchased by you under the terms of
                    this paragraph 4 shall revert back to the Company.

               (f)  You acknowledge that these securities have not been
                    registered under the United States Securities Act of 1933,
                    as amended, or the rules and regulations thereunder (the
                    "Securities Act"), and accordingly are restricted within the
                    meaning of, and subject to applicable impediments pertaining
                    to the transfer of restricted securities under, the
                    Securities Act. You represent and warrant to us that these
                    securities are being and will be acquired by you in good
                    faith solely for your own account, for investment purposes
                    and not with a view to subdivision, distribution or resale,
                    and may not be sold, transferred or assigned in the absence
                    of an effective registration statement for these securities
                    under the Securities Act or an opinion of our counsel that
                    registration is not required under the Securities Act.

               (g)  As used herein, the term "Interest Rate" shall mean a rate
                    equal to the lesser of (i) 6.5%, and (ii) 1% over the then-
                    current Federal Fund Rate.

        5. In all other respects, the terms of the Agreement will govern the
           relationship between us.
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     If the foregoing is acceptable to you, kindly sign this letter in the space
provided for your signature below, whereupon this letter will become a binding
amendment to the Agreement.

                                       Sincerely yours,

                                       ELECTRIC FUEL CORPORATION


                                       By: /s/ Yehuda Harats
                                          --------------------------------------
                                          Yehuda Harats
                                          President and Chief Executive Officer

ACCEPTED AND AGREED:


  /s/ Joshua Degani
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               Joshua Degani