ELECTROSOURCE, INC.

                      CONSULTING AGREEMENT

                       Wilburn B. Laubach

      THIS CONSULTING AGREEMENT (the "Agreement"), made effective
the  15th  day  of  July  1999,  is between  ELECTROSOURCE,  INC.
("Electrosource"), a Delaware corporation, having  its  principal
offices  at  2809 Interstate 35 South, San Marcos,  Texas  78666,
U.S.A.  and  Wilburn B. Laubach, having his place of business  at
8400 Shenandoah Drive, Austin, Texas 78753 ("Consultant").

                      W I T N E S S E T H:

      WHEREAS,  Consultant  possesses knowledge,  experience  and
administrative  expertise  in storage battery  technology  and/or
related fields of engineering activity; and

      WHEREAS,  Consultant has the knowledge and ability  and  is
duly  licensed  or  authorized  to assist  Electrosource  in  the
development of its technology; and

     WHEREAS, Electrosource desires the assistance of Consultant.

      NOW,  THEREFORE, in consideration of the promises  and  the
mutual  agreements  hereinafter  contained,  the  parties  hereto
intending to be legally bound, agree as follows:

1.     Term

       1.1    Electrosource  hereby  engages   Consultant   as
       independent  contractor for a term commencing  on  July
       15, 1999, and ending on July 14, 2000.

       1.2   Electrosource shall have the right to extend this
       Agreement by written notification at the same  rate  of
       compensation  provided  for in  Section  3  by  written
       notice  not less than two (2) weeks prior to  the  last
       day  of the initial term of this Agreement or Amendment
       to same.

       1.3   Electrosource may cancel this  Agreement  at  its
       sole  discretion with thirty (30) days advance  written
       notice  to  Consultant.  Electrosource's sole liability
       will be for hours worked at the rate specified, and for
       reasonable  travel  or  business expenses  incurred  in
       accordance with Section 4.

       1.4    Notwithstanding  any  other  provision  of  this
       Agreement,   if   Consultant  breaches   any   of   its
       provisions, Electrosource may terminate this  Agreement
       immediately upon written notice to Consultant.

       1.5   Upon  termination of this Agreement in accordance
       with any of its provisions, Electrosource shall have no
       obligation  to make further payments to Consultant  for
       services   performed  after  notice  is   received   by
       Consultant.  Notice  may be hand  carried  or  sent  by
       certified  mail.  Notice is effective upon  receipt  or
       within five (5) days of mailing, whichever is earlier.

2.     Duties

       2.1   Consultant shall use his best efforts  to  assist
       Electrosource with respect to matters pertaining to its
       manufacturing,    engineering   and   battery    design
       activities.  Consultant shall not during  the  term  of
       this   Agreement   accept  any  other   engagement   as
       consultant,  or enter into any employment relationship,
       with  respect to which any portion of his duties  would
       entail  assisting  any other entity  in  the  field  of
       energy  storage  or  batteries.  Consultant  shall   be
       reasonably available on an on-call, as-needed basis for
       a  minimum of one day per month, and additional time to
       be  scheduled on a mutually agreeable basis, to perform
       such  engineering  and  consulting  duties  as  may  be
       assigned  from  time  to  time by  Electrosource.  Such
       services  shall  be provided either at the  offices  of
       Electrosource or Consultant, or at such other locations
       as the parties may agree.

       2.2   Specific duties shall include, but not be limited
       to, serving the particular needs of the General Manager
       and others designated by him.

3.     Compensation

       As  full  compensation  for  the services  which  Consultant
       renders to Electrosource under this Agreement, Electrosource
       shall pay to Consultant $40.00 per hour. Invoices Consultant
       submits to Electrosource for services rendered shall include
       the    heading   "a   professional   consulting   firm   (or
       individual)."

4.     Expenses

       Electrosource shall reimburse Consultant for all proper  and
       reasonable expenses incurred by him pursuant to Consultant's
       consulting  duties.  Such  expenses  may  include  necessary
       actual expenses of out-of-town travel costs, communications,
       hotel  accommodations,  meals and  the  like  provided  that
       Consultant shall keep receipts and provide Electrosource  an
       accurate  and  complete accounting of all such  expenses  so
       incurred,  and  shall obtain Electrosource's  prior  written
       consent to any such expenses. Reimbursement of expenses will
       be  issued within fourteen (14) days of receipt of  complete
       accounting, with receipts, of same.

5.     Confidential and Proprietary Information

       5.1   The  parties agree that from time to time  during
             performance   of   this   Agreement   confidential   or
             proprietary  technical or business information  may  be
             provided   either   orally  or  in  written   form   to
             Consultant. Consultant shall keep confidential all such
             information  furnished by Electrosource  and  safeguard
             same   from  disclosure  or  use  by  any  unauthorized
             individuals  for any purpose other than in  performance
             of this Agreement.

       5.2   Consultant  shall  restrict  the  disclosure   of
             Electrosource's    confidential   and/or    proprietary
             technical  and  business information to  those  of  his
             employees  who  need to know the same for  purposes  of
             carrying  out this contract, and Consultant shall  have
             non-disclosure  agreements  with  all   such   persons.
             Consultant   shall   advise  all  such   employees   of
             Consultant's obligations of confidentiality under  this
             Agreement.

       5.3   In  event of termination or cancellation of  this
             Agreement for any reason whatsoever, Consultant  agrees
             promptly  to  deliver  to  Electrosource  all   written
             information of any sort made available to Consultant or
             created by it under the terms of this Agreement.

       5.4   Work  product created by Consultant shall  become
             the confidential proprietary property of Electrosource.
             Consultant  agrees to treat such work  product  in  the
             same manner as confidential proprietary information  of
             Electrosource. Consultant agrees that any remedy at law
             would  be  inadequate or a violation of this provision;
             consequently,  Consultant agrees that Electrosource  is
             entitled  to  obtain an injunction against Consultant's
             disclosure of any confidential proprietary information.

       5.5   Neither  expiration  of this  Agreement  nor  its
             earlier   termination  for  any  reason  shall  release
             Consultant from its obligations under this Section 5.

6.     Classified Information

       6.1   Except  in  connection  with  authorized  visits,
             classified  material  shall not  be  possessed  by  the
             Consultant off the premises of the Company. The Company
             shall not furnish classified material to the Consultant
             at  any other location than the premises of the Company
             and  performance  of  the consulting  services  by  the
             Consultant shall be accomplished at the premises of the
             Company;  and classification guidance will be  provided
             by the Company.

       6.2   The Consultant and his certifying employees shall
             not  disclose  classified information  to  unauthorized
             persons.

       6.3  Electrosource shall brief the Consultant as to the
            security  controls  and procedures  applicable  to  the
            Consultant's performance.

7.     Works of Authorship and Inventions

       7.1  Consultant  shall  convey  to  Electrosource  all
            rights  to  each  work of authorship,  whether  or  not
            patentable, which is conceived, developed, written,  or
            reduced  to  practice by Consultant in  performing  the
            requirements  of this Agreement. Consultant  agrees  to
            execute    all    necessary   patent   and    copyright
            applications,  assignments  and  other  instruments  at
            Electrosource's  expense and to  give  all  lawful  and
            proper testimony in aid of Electrosource obtaining  and
            maintaining  in  its  name  full  and  complete  patent
            protection on any such invention. Before final  payment
            is  made under this Agreement, Consultant shall furnish
            Electrosource complete information with respect to  any
            invention and all work product subject to this Section.

       7.2  Consultant  hereby  irrevocably  appoints   each
            officer  and director of Electrosource as his attorney-
            in-fact  for  purposes of filing  any  applications  or
            assignments  necessary  to properly  reflect  the  sole
            ownership by Electrosource of any invention or work  of
            authorship subject to this Section.

8.     Assignment and Subcontracting

       Neither this Agreement nor its performance, either in  whole
       or in part, shall be assigned or subcontracted by Consultant
       to  a  third party without, in each case, the prior  written
       consent of Electrosource.

9.     No Conflicts

       9.1   Consultant represents and warrants that:

             (a)  He has full authority to enter into this
             Agreement   and   to   perform   his   obligations
             hereunder; and

             (b)   Performance  by  Consultant  of   his
             obligations hereunder will not be in conflict with
             any other of his obligations.

       9.2   Consultant shall advise Electrosource's Executive
             Vice  President of all clients under similar  agreement
             to  him  within five (5) days after execution  of  this
             Agreement. Consultant shall not contract for additional
             clients without first having notified Electrosource  in
             writing.

       9.3   Notwithstanding  any  other  provision  of  this
             Agreement,  Electrosource  shall  have  the  right   to
             terminate  this  Agreement if, in Electrosource's  sole
             opinion,  a  conflict of interest rises  or  may  arise
             between  Consultant's representation  of  Electrosource
             and  its  representation  of its  other  clients.  Such
             termination shall become effective upon five  (5)  days
             written notification by Electrosource.



10.    Independent Contractor

       Consultant's relationship to Electrosource shall  be  solely
       to  provide  personal services on an independent  contractor
       basis.  In  this capacity, Consultant will not be a  regular
       employee  of  Electrosource and  will  not  be  entitled  to
       worker's  compensation coverage, unemployment insurance,  or
       any  other  type  or form of insurance or  benefit  normally
       provided   by   Electrosource   for   its   employees,   and
       Electrosource  will  not  be  responsible  for   withholding
       federal  income or social security taxes from the fees  paid
       to Consultant. The Consultant will be solely responsible for
       reporting  and  paying all Federal, State  and  Local  taxes
       arising   from  his  performance  of  this  Agreement.   The
       consultant  is  generally  free  to  perform  the   services
       hereunder  in  any manner desired, subject  to  satisfactory
       completion of the subject task.

11.    Notice

       A  notice  communicated to Electrosource shall  be  sent  to
       Benny E. Jay, Executive Vice President, Electrosource, Inc.,
       2809  Interstate 35 South, San Marcos, Texas  78666,  or  to
       such  other  place or places as Electrosource by  notice  in
       writing  shall  specify. Any notice to be  served  shall  be
       deemed  to  be  served if the same be sent by registered  or
       certified mail through the United States mail, addressed  to
       the  party on which service is to be effected at the address
       stated  in the immediately preceding sentences and shall  be
       deemed  to  have been received on the day indicated  on  the
       return receipt relating thereto.

12.    Binding Agreement

       This  Agreement  shall  be binding upon  and  inure  to  the
       benefit  of the successors and assigns of Electrosource  and
       to the successors and assigns of Consultant.

13.    Modification

       This   Agreement   supersedes  all   prior   agreements   or
       understandings between Consultant and Electrosource relating
       to  the subject matter hereof, and no change, termination or
       attempted  waiver of any of the provisions hereof  shall  be
       binding  unless  reduced  to  writing  and  signed  by  duly
       authorized officers of Electrosource and by Consultant.

14.    Construction

       This  Agreement  shall be construed in accordance  with  the
       laws of the State of Texas. Consultant hereby submits to the
       continuing  jurisdiction of the laws and the courts  of  the
       State  of Texas in the prosecution of any interpretation  or
       dispute  under or arising out of this Agreement. Should  any
       portion of this Agreement be adjudged or held to be invalid,
       unenforceable  or  void, such judgment shall  not  have  the
       effect  of  invalidating or voiding the  remainder  of  this
       Agreement, and the parties hereto agree that the portion  to
       be held invalid, unenforceable or void shall, if possible be
       deemed  amended  or  reduced in scope  or  to  otherwise  be
       stricken from this Agreement to the extent required for  the
       purposes of validity and enforcement thereof.

     IN WITNESS WHEREOF, this Agreement is dated and is effective
the date and year first above written.

ELECTROSOURCE, INC.                CONSULTANT



By:            /s/ Benny E. Jay      By:          /s/Wilburn B. Laubach

Printed  Name:     Benny E. Jay      Printed Name:  Wilburn  B. Laubach

Date:     8/5/1999                 Date:    8/5/1999

                                   SOCIAL SECURITY NUMBER OR
                                   FEDERAL IDENTIFICATION NUMBER:

                                            ###-##-####
WITNESS:


By:   /s/Don Perriello

Printed Name:   Don Pierrello

Date:     8/5/1999