EXHIBIT 10.16

                                Letter of Intent

This letter defines ******* intent to source to U.S. Electricar,  Inc. dba Enova
Systems the Traction  Inverter,  Charger & DC/DC Module  (referred to as LVDS-30
and designed to meet the  ************  Specification"  dated  November 5, 1999)
requirements for its Low Voltage Electric Drive System.  Purchase Orders will be
issued to cover the  Development  and the  Production  supply  portions  of this
Agreement.  A Purchase Order for  production  supply will be issued and Releases
against the Purchase Order will be issued  periodically to cover actual customer
demand. The terms and conditions of this relationship are outlined as follows:

1)   U.S. Electricar, Inc. will provide all requested Traction Inverter, Charger
     & DC/DC Modules.
2)   U.S.  Electricar,  Inc. fully warrants all parts for reliability to *******
     of  operation  not to  exceed  *********  from date of sale of the parts to
     ********.    This   warranty   period   overrides   the   warranty   period
     ***********************.
3)   U.S.  Electricar,  Inc.  will  work  with  ********  and its  suppliers  to
     integrate their Traction Inverter,  Charger & DC/DC Module with a Motor and
     Transaxle Assembly in order to provide a complete Electric Drive System for
     the vehicle program.
4)   In the event that U.S. Electricar,  Inc. files for bankruptcy under Chapter
     7 of the U.S.  Bankruptcy laws or is unable to supply systems in accordance
     with a  reasonable  delivery  schedule,  within the normal  control of U.S.
     Electricar,  Inc.  operations,  it grants  *********  the right to continue
     manufacture of these assemblies with the current manufacturing operation or
     any other manufacturing  operation selected by *********. It further grants
     *********  access  to  tooling,   manufacturing  and  software   (including
     controls, algorithms, source code, object code and binary code) information
     required to manufacture  these  assemblies,  but not explicitly paid for or
     defined in this agreement.
5)   ******** agrees to pay U.S. Electricar, Inc.:
a)   Piece price (***** units per year)......................$******* / assembly
     Piece price (***** units per year)......................$******* / assembly
b)   Development/ Design Fees.................................$******* Total fee
     (Fee will be paid upon  completion of work in  accordance  with the
     following "Program Schedule" see Items I-V below.)
c)   Production Tooling Charges - TIM................................$*******
d)   Production Tooling Charges - DC/DC............................$*******
e)   Production  Tooling Charges - Charger............................$*******
f)   Prototype Tooling Charges- TIM....................................$*******
g)   Prototype Tooling Charges- DD/DC................................$*******
h)   Prototype Tooling Charges- Charger................................$*******
i)   Prototype Parts - TIM...............**** $******* & *** $******* / assembly
j)   Prototype Parts - DD/DC ........... **** $******* & *** $******* / assembly
k)   Prototype Parts - Charger...........**** $******* & *** $******* / assembly
6)   U. S.  Electricar will provide  ********* a BOM of the major  components of
     the modules.  The BOM will include both cost and manufacturer  information.
     This  information  will provide  ********* the required  assurance that the
     system  will be  provided  within  the  quoted  cost and to the  automotive
     quality required of this program.

(**)-CERTAIN  INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED  SEPARATELY
WITH THE  COMMISSION.  CONFIDENTIAL  TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.


<PAGE>

7)   Shipping costs will be passed through and billed to ******** ** *******.
<TABLE>
The following schedule  identifies the timing for completion and payment of work
required to bring this program to production:
<CAPTION>
                                Program Schedule
<S>                                                                                    <C>
I.   Design & Development, Testing  & Tooling - (Lab Prototypes).......................$*******
     *********************************************************************

II.  Design & Development, Testing & Tooling - (Veh Prototypes)........................$*******
     *********************************************************************

III. Design & Development - Production Ready...........................................$*******
     *********************************************************************

IV.  Design & Development - Production Ready >>........................................$*******
     *********************************************************************

 V.  Design & Development - Production Ready...............*******.................... $*******
     *********************************************************************

VI.  Production Tooling -..............................Upon Prove-out of  Tool.........$*******
     *********************************************************************
</TABLE>
The  terms  and  conditions  provided  *********************  will  apply to all
Production; Prototype; Facilities; Tooling; Materials; and Services purchased in
this agreement:

     I.  ***********  Terms for Production  Parts and  Non-Production  Goods and
         Services  (******,rev 4/97) excluding  paragraphs 16c, d, e, and h, and
         paragraph 17 a, b, c, d (as amended and attached  hereto as  Attachment
         I).

     II. The  "Additional  Terms and  Conditions"  dated 12/9/99 and included as
         Attachment II.






---------------------------------           ------------------------------
********                                    Carl Perry
Director, Supply Management                 President and CEO
********                                    U.S. Electricar, Inc.
********                                    dba Enova Systems
********                                    19850 S. Magellan Drive
                                            Torrance, CA 90502

Attachments                                                             12/9/99


(**)-CERTAIN  INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED  SEPARATELY
WITH THE  COMMISSION.  CONFIDENTIAL  TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.


<PAGE>

                                  Attachment I


           Terms for Production and Non-Production Goods and Services






(**)-CERTAIN  INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED  SEPARATELY
WITH THE  COMMISSION.  CONFIDENTIAL  TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.


<PAGE>

                                  Attachment II

                                                                         12/9/99

                         Additional Terms and Conditions

         1.  DESCRIPTION  OF CONTRACT  SERVICES.  The Seller shall  provide,  as
requested by the Buyer, the following  services:  Provide  engineering,  design,
prototype build and production  manufacturing  and delivery  services to develop
Seller's  existing  Inverter,  Charger and DC/DC Modules and required tooling in
order to meet Buyer's  specifications  for  inclusion in a low voltage  electric
vehicle.  The Buyer shall,  at  appropriate  times,  provide,  in more  specific
detail,  the work  assignments to be performed by the employees  provided by the
Seller.  Buyer shall  designate in writing the person or persons  authorized  to
make such work  assignments  on behalf of Buyer.  To the extent  that the Global
Terms are inconsistent  with the Additional Terms and Conditions set out in this
Attachment, the Additional Terms and Conditions shall apply.

         2. FEE FOR CONTRACT SERVICES. In consideration of the Contract Services
to be  performed  as set out in  Paragraph 1, Buyer will pay Seller based on the
Design / Development fee as described in paragraph 5) of the Letter of Intent.

         3. PLACE OF  PERFORMANCE OF CONTRACT  SERVICES;  TRAVEL  EXPENSES.  The
contract  services  shall be  performed at a place or places  designated  by the
Buyer.  Except as otherwise  provided,  the Buyer shall not be  responsible  for
travel expenses incurred by the Seller in the performance of Contract  Services.
In the case of exceptional travel expenses incurred by Seller at Buyers request,
Buyer and Seller will consult upon responsibility for such expenses.

         4. STATEMENTS;  PAYMENT. Between the first and tenth day of each month,
Seller shall furnish a statement,  in a form agreed by Buyer,  covering Contract
Services  rendered and travel  expenses  incurred  during the  preceding  month.
Seller shall include on each such statement Seller's purchase order number, date
of invoice and invoice  number.  Buyer shall pay statements in good order within
30 days from receipt.  Buyer shall have the right to audit  Seller's  records at
any time prior to two years after final  payment to verify  payment  obligation.
The total fee payable to Seller for all Contract Services and expenses requested
and  provided  under this  Agreement,  shall not exceed the fees  identified  in
paragraph  5) of the Letter of Intent,  and Seller  shall not  perform  Contract
Services or incur any expenses  that causes the aggregate  amount  payable under
this  Agreement  to exceed such amount  without a written  modification  of this
Agreement.


(**)-CERTAIN  INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED  SEPARATELY
WITH THE  COMMISSION.  CONFIDENTIAL  TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.

<PAGE>

         5.  RELATIONSHIP.  Seller's  relationship to Buyer under this Agreement
shall be that of an independent  contractor and not an employee or agent. Seller
shall not  represent  or hold itself out as having any  relationship  with Buyer
other  than  that  of an  independent  contractor.  No new  assignments  will be
undertaken  by Seller  without  securing  prior  written  approval  from Buyer's
designated representative.  Buyer shall not be responsible for any tax levied on
Seller or Seller's employees or  representatives by any governmental  authority,
relating  to this  Agreement  or income  attributed  to  Seller's  employees  or
representatives.

         6. TITLE TO WORK PRODUCT.  All  information and data Seller develops or
acquires in performing  contract services  relating  specifically to the LVDS-30
shall belong to Buyer, without further consideration,  and shall be delivered to
Buyer upon completion of this Agreement or earlier if requested.  Buyer shall be
free to use and  disclose  to  others  all  information  and data  delivered  in
performing contract services.

         7. WORK  MADE FOR HIRE.  Any work of  authorship  created  by Seller in
performing the services relating  specifically to the LVDS-30 hereunder shall be
considered  as a  specially  ordered  or  commissioned  "Work  for Hire" and all
copyrights for such works of authorship shall belong to Buyer. All such works of
authorship  shall bear a valid  copyright  notice  designating  ********* as the
copyright  owner. In the event any portion of the work of authorship  created by
the Seller in  performing  the  services  relating  specifically  to the LVDS-30
hereunder does not qualify as "Work for Hire," Seller shall acquire title to the
copyright for such portion, and assign all acquired title and interest to Buyer.

         8. TITLE TO  INVENTIONS.  Every  invention,  discovery and  improvement
made,  conceived or reduced to practice in performing contract services relating
specifically to the LVDS-30 belong to Buyer, without further consideration,  and
shall be reported to Buyer  promptly.  Upon  request,  Seller shall  execute all
documents and papers, and shall furnish all reasonable  assistance  required (i)
to establish in Buyer title to such inventions, discoveries and improvements and
(ii) to enable  Buyer to apply for United  States and foreign  patents  thereon.
Seller grants to Buyer a fully-paid,  irrevocable,  non-exclusive  license under
all Intellectual Property of Seller necessary for Buyer to exercise such rights.
Seller also agrees to grant to Buyer a non-exclusive license on reasonable terms
and  conditions  under any other  Intellectual  Property  of Seller  embodied in
supplies or services  delivered  hereinunder,  to make,  have made, use and sell
articles and to use and have used processes.


(**)-CERTAIN  INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED  SEPARATELY
WITH THE  COMMISSION.  CONFIDENTIAL  TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.

<PAGE>
         9. COPYRIGHT LICENSE. Seller hereby grants to Buyer and to its domestic
and foreign  subsidiaries a permanent,  nonexclusive,  paid-up worldwide license
under each  copyright  owned or controlled or have the right to license for such
purposes,  in each work of authorship fixed in any tangible medium of expression
furnished to Buyer or its designee in performing contract services,  to use such
work  for  Buyer's  internal  purposes,  to  reproduce  such  work,  to  prepare
derivative  works solely for use in  connection  with the  incorporation  of the
LVDS-30 into electric  vehicles and the sale,  lease,  repair and maintenance of
such vehicles but for no other  purpose,  distribute  copies of such work to the
public, and perform and display such work publicly.

         10. CONFIDENTIALITY. Seller and its employees shall use the information
and data  acquired  from Buyer or third  parties  under this  Agreement  only in
performing  the  Contract  Services,  and shall not disclose to any third party,
during the period of this Agreement and  thereafter,  any such  information  and
data that is not in the public domain.

         11. LIABILITY FOR PERSONAL  INJURIES AND PROPERTY DAMAGE.  Seller shall
be responsible  for and shall hold Buyer  harmless from all expenses,  including
legal fees, which arise from its performance  hereunder and which are for actual
or alleged  injury to any person or damage to any  property,  including  Buyer's
property,  except to the extent that such expenses are  attributable  to Buyer's
negligence or willful misconduct.

         12. EMPLOYMENT; THIRD PARTIES. Seller shall exercise reasonable care in
the  employment of personnel and third party  contractors.  Seller shall require
each employee and third party to execute and deliver to Buyer an agreement under
which the third party is bound to the terms set fourth in Paragraph 5 through 13
hereof.

         13.  COMPLIANCE  WITH LAW AND GOVERNING  LAW.  Seller and its employees
shall comply with all applicable laws and regulations in performing the services
under  this  Agreement.  This  Agreement  shall be  construed  and  enforced  in
accordance  with the laws of the State  of********.  Litigation  on  contractual
causes arising from this agreement  shall be brought only in a federal  District
Court located in******** or in a court of the State of********.


(**)-CERTAIN  INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED  SEPARATELY
WITH THE  COMMISSION.  CONFIDENTIAL  TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.