FORM 10Q
               SECURITIES AND EXCHANGE  COMMISSION
                     Washington, D.C.  20549

(Mark One)
[X]  QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1999
                               OR

[ ]  TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

Commission file number 0-16323

                       ELECTROSOURCE, INC.

     (Exact name of Registrant as specified in its charter)

           Delaware                             742466304
(State or other jurisdiction of  (I.R.S. Employer Identification No.)
incorporation or organization)

 2809 Interstate 35 South, San                78666
         Marcos, Texas
(Address of principal executive             (Zip Code)
           offices)

Registrant's telephone number,            (512) 753-6500
     including area code:

     Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X  No __

       APPLICABLE  ONLY TO ISSUERS INVOLVED  IN BANKRUPTCY
           PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.

Yes  __  No __

             APPLICABLE  ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:  11,276,631 as of November 10, 1999.


                  INDEX TO FINANCIAL STATEMENTS
                       September 30, 1999


ELECTROSOURCE, INC.              COMMISSION FILE NUMBER   0-16323


PART I - FINANCIAL INFORMATION

  Item 1.  Financial Statements.

     Condensed Balance Sheets at September 30, 1999  (Unaudited)
       and December 31, 1998                                     Page  3

     Condensed Statements of Operations for the three and nine
       months ended September 30, 1999 and 1998 (Unaudited)      Page  4

     Condensed Statements of Cash Flows for the nine months ended
       September 30, 1999 and 1998 (Unaudited)                   Page  5

     Notes to Condensed Financial Statements (Unaudited)         Page  6

  Item 2.  Management's Discussion and Analysis of Financial
     Condition and Results of Operations (Unaudited)             Page  9

PART II - OTHER INFORMATION

  Item 1.  Legal Proceedings                                     Page 12

  Item 2.  Changes in Securities                                 Page 13

  Item 3.  Defaults On Senior Securities                         Page 13

  Item 4.  Submission of Matters to a Vote of Security Holders   Page 13

  Item 5.  Other Information                                     Page 13

  Item 6.  Exhibits and Reports on Form 8-K                      Page 13

INDEX TO EXHIBITS                                                Page 16


                 Part I - Financial Information

Item 1.  Financial Statements

                       Electrosource, Inc.
                    Condensed Balance Sheets

                                             September      December
                                              30, 1999       31, 1998
                                            (Unaudited)
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                 $    5,844    $   207,246
  Trade receivables                          1,024,529        109,520
  Inventories                                  173,478        350,464
  Prepaid expenses and other assets             32,258         29,938

TOTAL CURRENT ASSETS                         1,236,109        697,168

PROPERTY AND EQUIPMENT (net of accumulated
  depreciation of $4,152,735 in 1999 and
  $4,028,762 in 1998)                        2,919,286      3,462,157

INTANGIBLE ASSETS (net of accumulated
  amortization of $2,188,012 in 1999 and
  $2,046,397 in 1998)                          860,662      1,002,277

OTHER ASSETS                                    53,250         55,500

TOTAL ASSETS                                $5,069,307     $5,217,102

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                         $   854,412     $  948,528
  Accrued liabilities                        1,407,150      1,308,346
  Deferred revenue and advance payments
    on batteries                               396,759        649,893
  Current portion of capital lease
    obligations                                 84,165         77,006

TOTAL CURRENT LIABILITIES                    2,742,486      2,983,773

CAPITAL  LEASE OBLIGATIONS
  (less current portion)                         7,463         71,512

SHAREHOLDERS' EQUITY (DEFICIT)
  Common Stock, par value $1.00 per share,
    Authorized 50,000,000 shares; issued
    and outstanding 11,276,631 in 1999
    and 8,434,531 in 1998                   11,276,631      8,434,531
  Preferred Stock, par value $1.00 per
    share; authorized 10,000,000 shares,
    no shares issued or outstanding                  -              -
  Common Stock subscription receivable        (467,663)      (467,663)
  Warrants                                           -              -
  Paid in capital                           51,481,594     51,446,504
  Accumulated deficit                      (59,971,204)   (57,251,559)

                                             2,319,358      2,161,817

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,069,307   $  5,217,102


See notes to financial statements.


                       Electrosource, Inc.
         Condensed Statements of Operations (Unaudited)



                                 Three Months Ended    Nine Months Ended
                                   September 30,         September 30,
                                  1999        1998        1999           1998
Revenues
  Battery sales              $   152,230   $  480,760   $  427,204   $  869,380
  Project revenue                632,312      413,290    1,097,498      628,246
  Other income                    53,338            -      108,154            -
  Interest income                     13        4,636           77       33,209

                                 837,893      898,687    1,632,933    1,530,835
Costs and expenses
  Manufacturing                  569,167    1,076,316    1,897,466    2,811,005
  Selling, general and
    administrative               171,635      399,243      736,290    1,582,010
  Research and development       387,795      347,676      939,843    1,427,318
  Technology license and
    royalties                     25,000       25,000       75,000       75,000
  Depreciation and
    amortization                 223,589      432,945      690,687    1,344,018
  Interest expense                 3,866        6,086       13,292      356,507

                               1,381,052    2,287,266    4,352,578    7,595,858

Loss before extraordinary
  gain                          (543,159)  (1,388,579)  (2,719,645)  (6,065,023)

Extraordinary gain from early
  extinguishment of debt (Note D)      -            -            -    3,532,045

Net income (loss)              $(543,159) $(1,388,579) $(2,719,645) $(2,532,978)

Net income (loss) per
  common share                    $(0.05)      $(0.22)      $(0.28)      $(0.45)

Average common shares
  outstanding                 10,695,327     6,209,941    9,652,391   5,657,608

See notes to condensed financial statements.


                       Electrosource, Inc.
         Condensed Statements of Cash Flows (Unaudited)

                                                      Nine Months Ended
                                                        September 30,
                                                     1999        1998
OPERATING ACTIVITIES
  Net loss                                     $(2,719,645)   $(2,532,978)

  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Equity instruments for consulting services         -        300,000
   Depreciation and amortization                   684,486      1,344,019
   Non-cash interest expense                        44,888        359,571
   Amortization of prepaid lease expense                 -        319,605
     Extraordinary gain from early -
       extinguishment of debt                            -     (3,532,045)
  Changes in operating assets and liabilities:
    (Increase) decrease in trade receivables      (915,009)      (226,032)
    (Increase) decrease in inventories             176,986        (45,193)
    (Increase)  decrease in prepaid  expenses
       and other assets                                (70)        39,230
    Decrease in accounts payable and
      accrued liabilities                          (40,200)      (188,063)
    Increase (decrease)in deferred revenue
      and advanced payments on batteries           (253,134)    1,076,244

CASH USED IN OPERATING ACTIVITIES                (3,021,698)   (3,085,642)

INVESTING ACTIVITIES
 Purchases of property and equipment, net           (56,890)      (94,363)
CASH USED IN INVESTING ACTIVITIES                   (56,890)      (94,363)

FINANCING ACTIVITIES
  Proceeds from issuances of convertible notes
    payable and related warrants to purchase
    Common Stock                                          -     1,000,000
  Payment of notes payable and capital  lease
    obligations                                           -    (1,554,403)
  Proceeds from issuances of common stock, net    2,877,186     3,000,000
  Decrease in restricted cash                             -        81,604
CASH PROVIDED BY FINANCING ACTIVITIES             2,877,186     2,527,201

INCREASE (DECREASE)IN CASH AND
  CASH EQUIVALENTS                                 (201,402)     (652,804)

Cash and cash equivalents at
  beginning of period                               207,246       782,918

CASH AND CASH EQUIVALENTS AT END OF PERIOD       $    5,844    $  130,114

See notes to condensed financial statements.

Electrosource, Inc.
September 30, 1999
Item 1.  Notes of Condensed Financial Statements (Unaudited)

NOTE A - BASIS OF PRESENTATION

The  accompanying unaudited condensed financial  statements  have
been  prepared  in accordance with generally accepted  accounting
principles  for interim financial information. Accordingly,  they
do  not  include  all of the information and  notes  required  by
generally  accepted accounting principles for complete  financial
statements.   In  the  opinion  of management,  all  adjustments,
consisting of normal recurring accruals, considered necessary for
a  fair presentation have been included.  These interim financial
statements  should  be  read in conjunction  with  the  financial
statements  and  notes thereto included in the  Company's  Annual
Report on Form 10-K for the year ended December 31, 1998, and are
not necessarily indicative of results for the entire year.

NOTE B - INVENTORIES
                                        1999        1998

      Raw materials                   $137,080    $147,235
      Work in progress                  35,544      61,499
      Finished goods                       854     141,730
                                      $173,478    $350,464


NOTE C - PROPERTY AND EQUIPMENT

                                        1999        1998

      Office equipment              $  801,610   $  801,610
      Production and lab equipment   5,394,491    5,388,291
      Leasehold improvements           875,920    1,301,018

                                     7,072,021    7,490,919

      Less-accumulated depreciation
        and amortization            (4,152,735)  (4,028,762)

      Total Property and Equipment  $2,919,286   $3,462,157

NOTE D - CONVERTIBLE NOTES PAYABLE

In  June  1998, in accordance with the terms of a Stock  Purchase
Agreement  ("Agreement")  with  Kamkorp  Limited  ("Kamkorp"),  a
company  organized in England, the Company executed an  agreement
with   Corning  Incorporated  ("Corning")  to  retire  the   full
$6,293,002  in outstanding Convertible Notes Payable and  accrued
interest owed to Corning, in exchange for $1,500,000 in cash. The
transaction was completed on June 16, 1998. The Convertible Notes
Payable  and accrued interest had a carrying amount of $5,032,045
(after  unamortized  discount  of $1,260,957),  resulting  in  an
extraordinary  gain  from  the early extinguishment  of  debt  of
$3,532,045 upon completion of the transaction. Basic and  diluted
earnings  per  share for the extraordinary gain  from  the  early
extinguishment   of  debt  were  $0.68  and  $0.73   per   share,
respectively, for the three and six month periods ended June  30,
1998. The $1,500,000 was provided to the Company by Kamkorp  from
the  sale  of 1,500,000 share of Common Stock under the terms  of
the Agreement. (See Note G).

NOTE E - CONTINGENCIES

In  1994, the Company signed a "Know-How License Agreement"  (the
"Agreement")  with Horizon Battery Technologies, Ltd.,  ("HBTL"),
of  Bombay, India, calling for the completion of several detailed
subordinate  agreements with the ultimate purpose to license  the
manufacture and sale of batteries in India. The effectiveness  of
the  Agreement was conditioned upon the subsequent  execution  of
these  six  related agreements, none of which were executed.  The
Company believes, therefore, the Agreement never became effective
and  has  no force or effect. Separately in 1995, HBTL agreed  to
pay  the Company $250,000 for a Preliminary Design Review ("PDR")
for  a  potential  manufacturing  facility  in  India  which  was
required  to  complete  one  of the subordinate  agreements.  The
Company  received  $100,000 from HBTL and completed  the  PDR  in
1995. The remaining $150,000 was never paid by HBTL, in spite  of
repeated demands by the Company.

In  September  1996, the Company received a demand from  HBTL  to
arbitrate damage claims for alleged breach of the Agreement. HBTL
claimed  damages of approximately $5.1 million for  its  expenses
and  lost  profits related to the Agreement. The Company disputes
the claim for damages and will vigorously defend any action taken
by  HBTL  to pursue the claims. The Company also filed a petition
in  State  Court  in Travis County, Texas, seeking,  among  other
things,  a  declaratory  judgment  that  HBTL  had  no  right  to
arbitration  or monetary relief. HBTL contested jurisdiction  and
removed  the proceedings to the U.S. Federal District Court.  The
Federal District Court to which the action was removed ruled that
it did not have personal jurisdiction over HBTL and therefore had
no  power  to hear the case. The Company filed an appeal  in  the
U.S.  Fifth Circuit Court of Appeals from the final judgment  and
rulings in the Federal District Court, which denied jurisdiction.
The  appeal was successful and the case was remanded to the  U.S.
Federal District Court which ruled in favor of the Company in 1999.

The  Company  is  also  involved in certain  other  contingencies
incidental to its business. While the ultimate results  of  these
matters  cannot be predicted with certainty, management does  not
expect  them  to have a material adverse effect on the  financial
position of the Company.


NOTE F - EARNINGS PER SHARE

Basic  and diluted loss per share is based on the average  number
of  shares of common stock outstanding during each period.  Since
the  Company  has  experienced net operating losses,  outstanding
options   and   warrants  to  purchase  common  stock   have   an
antidilutive  effect. Therefore, such options and  warrants  were
not included in the diluted loss per share calculation.


NOTE G - LIQUIDITY

Under the terms of an Agreement entered into with the Company  in
June  1998, Kamkorp Limited ("Kamkorp") agreed to provide  up  to
$6,000,000   of  equity  funding  for  6,000,000  Common   Shares
("shares")  at $1.00 per share. In addition, Kamkorp was  granted
an  option to purchase up to 3,000,000 shares at $1.00 per  share
under  the  initial agreement. On October 27, 1999,  the  Company
granted  Kamkorp  an  option to purchase an additional  3,000,000
shares of its Common Stock at a price of $1.00 per share.   These
latest options  expire  as  to 2,000,000 shares in six  months,  500,000
shares  in  nine  months, and 500,000 shares  in  twelve  months.
Kamkorp is the beneficial owner of 12,000,000 shares representing
72.3% of the Company's Common Stock if all options to Kamkorp are
exercised. As of November 10, 1999, Kamkorp has paid for and been
issued 6,680,000 shares at $1.00 per share, representing 59.2% of
the Company's outstanding Common Stock at that date.

In  accordance with the terms of the Agreement Kamkorp  nominated
three  members  to  the Company's Board of  Directors,  who  were
unanimously  approved  by the Board of  Directors,  and  has  the
ability  to  ultimately have control of the Board  of  Directors.
Additionally, pursuant to the terms of the Agreement, the Company
must  obtain  approval from Kamkorp for all important  management
policies and decisions, which include the following:

     a.   issuance of Common Stock or any security which provides for
          the right to acquire Common Stock, or any other capital stock of
          the Company;
     b.   overall policy decisions relating to business direction and
          manufacturing capacity;
     c.   any agreement or commitment that materially affects  or
          modifies the intellectual property owned by the Company;
     d.   approval of the annual operating budget, capital budget,
          overhead budgets and business plans of the Company;
     e.   approval of any merger, consolidation, partnership or joint
          venture;
     f.   approval of transfer of any assets of the Company with a
          fair market value greater than $100,000;
     g.   incurring indebtedness for borrowed money, granting any
          material pledge or security interest in the assets of the
          Company;
     h.   increasing the size of the Company's Board of Directors;
     i.   amending the Company's Certificate of Incorporation  or
          Bylaws;
     j.   entering into any transaction involving an amount greater
          than, or having a value in excess of, $100,000 or involving a
          term or commitment for more than 12 months; and
     k.   other various management policies and decisions.

During the nine months ended September 30, 1999, existing battery
orders  and  contract work have not been adequate to sustain  the
Company  on  an  ongoing basis and the Company  continues  to  be
dependent  on  cash payments from Kamkorp and its  affiliates  to
continue  operations on a day-to-day basis. As  of  November  15,
1999,  the Company has not met its obligations to pay certain monthly
operating costs including  building  rent,  corporate  liability
insurance  premiums, worker's compensation insurance premiums,
telephone billings, property tax payments, employee health insurance
premiums, equipment operating leases and numerous smaller operating
costs.  The Company anticipates that funds will be available from Kamkorp
in an amount sufficient to alleviate  this problem; however, Kamkorp is
not obligated to provide additional funds, and there is no assurance
that the funds will be forthcoming.  The Company  has  approximately
$750,000  of  outstanding accounts payable greater than  30  days past
due,  most  of which is payable to raw material  suppliers, some  of
which date back to June 1998.  Certain of these vendors have
hreatened legal action for non-payment of invoices.    One such  vendor
sued  the  Company in May  1999  for  approximately $12,000  and the
suit was settled in the third quarter.   Another vendor sued the
Company in October 1999 for approximately $12,000 and this suit has
not yet been settled.

Funding  from  Kamkorp,  additional  battery  orders,  or   other
financing  will  be  required in the fourth quarter  of  1999  to
continue  operations and to maintain compliance with the  minimum
listing  standards  of The Nasdaq Stock Markets  ("Nasdaq").  The
Company  is  discussing the possibility of accelerated  financing
from  Kamkorp,  which could be provided under the  terms  of  the
Agreement through Kamkorp's exercise of all or a portion  of  its
options  to  purchase  the  balance of 5,320,000  shares  of  the
Company's Common Stock at $1.00 per share.

The  Company's  Common  Stock is traded in  the  Over-the-Counter
Market and is reported on Nasdaq. In order to maintain listing by
Nasdaq  under rules which went into effect in February 1998,  the
Company must maintain a minimum $2,000,000 of net tangible assets
(total  assets, excluding goodwill, minus total liabilities)  and
the  Company's  closing stock price cannot fall below  $1.00  per
share  for  30 consecutive trade dates. On February 1, 1999,  the
Company received written notice from Nasdaq that the closing  bid
price  of  its  shares fell below $1.00 for 30 consecutive  trade
dates  and  therefore  did not meet the  Nasdaq  minimum  listing
requirements.  The  written notification stated  that  within  90
calendar  days  of  the notification, the Company's  closing  bid
price must be $1.00 or higher for ten consecutive trading days to
satisfy  the  requirement. This requirement was met on  or  about
February  18,  1999.  As of  March 31, 1999,  the  Company's  net
tangible  assets  were less than $2,000,000.  As  a  result,  the
Company   was   not  in  compliance  with  the  minimum   listing
requirements  of  Nasdaq and advised Nasdaq  of  that  fact.  The
Company anticipated that Kamkorp would make an additional  equity
investment  in the Company in April 1999 sufficient to  bring  it
into  compliance; this did not occur due to delays in  completing
renegotiation   of  outstanding  battery  orders   with   Kamkorp
affiliates.  On April 15, 1999, the Company received notice  from
Nasdaq that it was concerned that the Company may not be able  to
sustain  compliance  with the continued listing  requirements  of
Nasdaq  in  light  of  the  "going  concern"  opinion  from   its
independent auditor. To address this concern, Nasdaq requested  a
detailed  letter  from the Company on or before April  30,  1999,
discussing the Company's plans to address the specific items that
led  to  the issuance of the "going concern" opinion, an expected
timeline   for  resolution  of  these  items  and  a   discussion
explaining  why the Company believes it will be able  to  sustain
compliance  with the continued listing standards of  Nasdaq.  The
Company   complied  with  this  request  on   April   30,   1999.
Additionally, on May 20, 1999, the Company received  notice  that
since the Company failed to meet the requirement for net tangible
assets of $2 million on the March 31, 1999 Form 10-Q, the Company
would  be required to submit before June 4, 1999, a proposal  for
achieving compliance. This proposal was submitted June  3,  1999.
The  Nasdaq Staff responded to both of these issues in  a  letter
dated  July  14, 1999. The Staff has reviewed the Company's  plan
for  regaining  and maintaining compliance and  stated while
the Staff has determined that  the Company will not be delisted due
to its previously cited failures to comply, they have determined
to apply more stringent reporting requirements.  The  Company is
required  to  submit  an  internal balance  sheet and statement of
operations for the  period  ended July  31,  1999  by  August 20,
1999. Thereafter,  until  further notice,  the  Company is required
to submit by the 20th  of  each month, an internal balance sheet
and statement of operations  for the  preceding  month's end. The
Company has complied  with  this requirement.  The Company is required
to keep Nasdaq apprised  of all  material events and any changes in
its financial statements. Should  the  Company  fail to maintain
$2  million  net  tangible assets,  the  Staff will issue a formal
delisting letter  to  the Company.

In  the event that the Common Stock were no longer traded on  the
Nasdaq market, brokers and dealers effecting trades in the Common
Stock  would  become  subject  to  the  Securities  and  Exchange
Commission rules covering trading in "penny stocks." These  rules
generally   require  that  such  broker-dealers   make   specific
disclosures  to customers including information on available  bid
and  asked  prices for the stock in question and compensation  to
the broker-dealer and his associates with respect to the proposed
trade, and provide periodic reports as to the market value  of  a
customer's  position  in penny stocks.   The  rules  also  impose
heightened "know your customer" requirements that require broker-
dealers  to  obtain  information,  including  personal  financial
information, from customers sufficient to allow the broker-dealer
to  make  a determination that the investment in penny stocks  is
suitable  for  the customer and that the customer is  capable  of
assessing the risks of such an investment.  Broker-dealers may be
less  willing to effect trades in any security subject  to  these
rules  due to the additional disclosure, record-keeping and other
requirements  imposed by the rules. In addition,  some  potential
investors in penny stock may be reluctant to provide the required
personal  financial  information  to  broker-dealers,  which  may
reduce  the  number of potential investors. These  factors  would
likely further reduce trading liquidity in the Common Stock.

If the Company were delisted from Nasdaq, it would likely be more
difficult to obtain additional funding. There can be no assurance
that  additional funding which will generate sufficient  cash  to
sustain  operations can be obtained on terms  acceptable  to  the
Company,  if at all. The financial statements do not include  any
adjustments  to  reflect  the  possible  future  effects  on  the
recoverability  and classification of assets or the  amounts  and
classification of liabilities that may result from  the  possible
inability of the Company to continue as a going concern.

Item  2.   Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations (Unaudited)

Financial Condition

The  Company's  cash  balance decreased from $207,246  to  $5,844
during  the nine months ended September 30, 1999, as a result  of
operating  losses  in  excess  of equity  sales.   Subsequent  to
September  30, 1999, additional equity funding from  Kamkorp  and
funds  from  customers have been received to sustain  operations.
Trade  receivables  increased from $109,520 to $1,024,529  during
the nine months ended September 30, 1999 as a result of increased
research and development billings under an agreement between  the
Company and Frazer-Nash Research, Inc.  Inventories declined from
$350,464 to $173,478 as a result of battery shipments for  orders
outstanding  at the end of the year and shipments throughout  the
first nine months of 1999.

As  of November 15, 1999, the Company has not met its obligations
to  pay  certain monthly  operating costs including building rent,
corporate liability insurance premiums, worker's compensation insurance
premiums, telephone billings, property tax payments, employee health
insurance premiums, equipment operating leases and numerous smaller
operating costs.  The Company anticipates that funds will be available
from Kamkorp in an amount sufficient to  alleviate this problem;
however, Kamkorp is not obligated to provide additional funds, and
there is no assurance that the funds will be forthcoming.

The Company sold 800,000, 1,300,000, and 680,000 shares of Common
Stock  to Kamkorp for $1.00 per share in the quarters ended March
31,  June  30, and September 30, 1999, respectively; participants
in  the Company's stock option plans exercised options for 51,000
and  11,000 shares of Common Stock in the aggregate for  a  total
consideration  of  approximately  $80,000  and  $17,000  in   the
quarters ended March 31 and June 30, 1999, respectively.

Results of Operations:

Revenues.    The  Company  had  battery  sales  of  approximately
$152,000  and  $427,000  for  the three  and  nine  months  ended
September  30,  1999 compared to $481,000 and  $869,000  for  the
three and nine months ended September 30, 1998.  The decrease  in
sales to Chrysler and Lockheed Martin is the reason for the lower
revenues in 1999 as compared to 1998.  Approximately 30%  of  the
1999  and  27%  of  the  1998 battery  sales,  were  to  Chrysler
Corporation.  These purchases were for testing and evaluation  of
the  Horizon  battery  in  the  EPIC  Minivan  Program.  Chrysler
announced  its decision to use Nickel-Metal-Hydride batteries  in
its  electric  minivan for the 1999 model year.  Any  significant
sales to Chrysler for the remainder of 1999 and sales beyond this
period  are  uncertain.  The majority of the  remainder  of  1999
battery  sales were to Lockheed Martin for use in Hybrid Electric
Vehicles  ("HEV") and Electric Vehicles ("EV") they are producing
for testing and evaluation. Sales of batteries to Lockheed Martin
are  expected to increase slightly throughout 1999. Approximately
36%  and  11%  of the 1999 and 1998 battery sales,  respectively,
were  to Lockheed Martin. Lockheed Martin produces a drive  train
used  in  hybrid buses manufactured by the Orion Bus Company  and
others.  The New York City Transit Authority is currently testing
a  hybrid diesel bus on the streets of New York City manufactured
by  Orion, which is powered by a Lockheed Martin drive train  and
Electrosource batteries. The tests have been completed  and  were
successful.  The  New York City Transit Authority  may  place  an
order  for the hybrid buses powered by Horizon batteries  in  the
fourth  quarter of 1999; however, the amount and timing  of  such
orders remains uncertain. The remainder of battery sales were  to
various customers for testing and evaluation.

The  Company  received a purchase order in June  1999  for  8,000
12H85  batteries from Electrosource International Limited ("EIL")
for  delivery  beginning  in  the  third  quarter  of  1999  with
completion of the order in the first quarter of 2000. The Company
delivered  290 batteries against this order in the quarter  ended
September  30, 1999 and is scheduled to deliver 694 batteries  in
the  quarter  ended December 31, 1999.  EIL is the  international
marketing  company  and is affiliated with  Kamkorp.  This  order
replaces a previous order for 5,800 batteries of which 2,062 were
shipped.  These battery sales represent 42 percent of the battery
sales in 1998 and 11 percent of battery sales in 1999.


The  Company  had project revenue of approximately  $632,000  and
$1,097,000 for the three and nine months ended September 30, 1999
compared  to $413,000 and $628,000 for the three and nine  months
ended June 30, 1998.  The Company had approximately $501,000  and
$683,000  of project revenue for the three and nine months  ended
September 30, 1999, under an agreement with Frazer-Nash  Research
Limited  for  the  continued  research  and  development  of  the
Company's  battery technology. The Company also had  $100,000  of
other  income from Electrosource International, Ltd. ("EIL")  for
marketing  assistance to complete negotiations for  an  order  of
8,000  of  the  Company's 12H85 batteries. This  order  from  EIL
follows  receipt  of an order from Perusahaan  Otomobil  Elektrik
(Malaysia) Sdn. Bdh. ("POEM"). The remaining revenue generated in
1999  was  from  cooperative development and research  agreements
with the Defense Advanced Research Projects Agency ("DARPA")  and
with the Department of Energy ("DOE"). The DARPA programs are for
various  HEV  and  EV applications. The DOE program  is  for  the
development  of  core technology for a lithium  polymer  material
eventually  to  be  used in batteries. Similar programs  were  in
progress  in  1998.  Project  revenue  is  expected  to  decrease
throughout  1999 as some of the DARPA programs were completed  in
early 1999.

Costs and Expenses.  Total costs were significantly lower in  the
three  and nine months ended September 30 , 1999 compared to  the
three  and  nine  months ended September 30, 1998.  Manufacturing
costs were lower in 1999 primarily due to savings associated with
the  non-production of batteries in the three  quarters  such  as
lower   utilities,  consumables/equipment  and  hazardous   waste
removal  costs, etc. Additionally, certain operating  leases  for
manufacturing  equipment began to expire in late 1998  and  early
1999  reducing  1999 manufacturing lease expense. Some  of  these
expired leases pertain to equipment necessary for production  and
will  have to be renegotiated, so that the expense reduction will
be  only  temporary  to  that extent. The  per  battery  cost  of
building  batteries  (direct  material  and  direct  labor)  also
decreased   throughout  1998  contributing  to  the  decline   in
manufacturing  costs in 1999.  Manufacturing costs have  remained
high  as a percentage of battery sales, primarily due to the lack
of capital required to further automate the production processes,
materials  being purchased in low volumes and the fixed  facility
cost   for  leasing  and  maintaining  the  88,000  square   foot
manufacturing  and  office  facility.   Management  expects  that
manufacturing costs can decrease as a percentage of battery sales
as  volume production begins; however, additional capital will be
required to significantly reduce labor and raw material costs per
battery.

Selling, general and administrative costs have decreased for  the
three  and nine months ended September 30, 1999 compared  to  the
three and nine months ended September 30, 1998, primarily due  to
labor  reductions  throughout  1998  and  early  1999  in  middle
management  and  executive  management  positions  combined  with
reductions  in  travel costs.  Such costs are expected  to  begin
increasing as the level of production activity increases.

Research and development costs have decreased for the nine months
ended September 30, 1999 compared to the same period in 1998  due
to  the  reduction  in  work  on development  programs  in  1999,
primarily  SMH  Automobile  S.A. ("SMH"),  which  terminated  its
contract with the Company in mid-1998 and a reduction in work  on
the  Fiat  Auto  ("Fiat")  program associated  with  the  current
shortage  of  raw  materials. In addition, the  Company  incurred
approximately $200,000 of costs in the first quarter of  1998  on
improvements  in manufacturing processes and joint  research  and
development  efforts with Corning Incorporated ("Corning").  This
program  was  terminated  by Corning in  mid-1998.  Research  and
development  costs  are expected to remain at  approximately  the
same level throughout 1999.

Depreciation and amortization costs decreased for the  three  and
nine  months ended September 30, 1999 compared to the  three  and
nine  months ended September 30, 1998, primarily due to the  full
amortization  of  purchased technology  in  October  1998,  which
resulted  in  a  monthly  decrease of  approximately  $67,000  in
amortization.  The remainder of the decrease in 1999  is  due  to
the  full  depreciation of various production pieces of equipment
in 1998 and 1999 which remain in use.

Interest  costs  decreased in 1999 as the  Company's  outstanding
debt  obligations to Corning were fully settled in June of  1998,
following the equity funding from Kamkorp.

Liquidity  and Capital Resources. Liquidity and Capital Resources
have  been discussed in detail under "NOTE G - LIQUIDITY" to  the
interim  financial  statements, which is incorporated  into  this
Item 2 by reference.

In addition to the disclosures under that Note, in December 1997,
the  Company  issued 299,304 shares of Common  Stock  to  BDM  as
partial  payment for past obligations owed to BDM  for  occupancy
related  costs (which the Company has accrued) and as  prepayment
under  operating  leases for manufacturing  equipment  which  are
guaranteed  by  BDM.  The number of shares issued was  determined
based  on the fair market value of the shares at the date of  the
agreement  ($2.56 per share).  When the shares are sold  by  BDM,
the  proceeds  will  be  used to satisfy these  past  and  future
obligations.   If the proceeds from the sale of such  shares  are
not sufficient to satisfy the obligations, the Company will issue
additional shares of Common Stock or pay cash to BDM to  make  up
the  deficiency.  BDM has agreed to reduce amounts owed to it  by
at  least $1.00 per share or $299,304 for the shares issued.  BDM
will retain any overage from the sale of such shares in excess of
the  amounts  owed. Additionally, the Company has agreed  to  pay
$300,000  to  BDM  (for  the remaining unpaid  occupancy  related
costs) from the proceeds received from any fundraising activities
completed  by  the  Company before March 31, 1998  in  excess  of
$5,000,000, which did not occur. As a result of this transaction,
a  Common Stock subscription receivable of $467,663 was recorded.
The  Company's  closing  market price as reported  by  Nasdaq  on
November 10, 1999 was $1.00.  BDM has not notified the Company of
an  intent to sell such shares in the near term; however,  unless
the  value  of  the  Company's Common Stock  improves,  based  on
current  market prices of the Company's Common Stock,  additional
shares  of Common Stock or cash will be required to settle  these
obligations under the terms of this agreement.

Significant capital expenditures will be required in  the  future
to  further  automate and achieve consistency in  the  production
process;  however,  such  expenditures are  not  expected  to  be
significant in 1999 to satisfy current battery orders. There were
no significant capital commitments at September 30, 1999.

The Company terminated the employment of Gary Sams, an officer of
the  Company, in January 1999. On March 10, 1999, Mr. Sams  filed
an  action  in  the 207th Judicial District Court  (Hays  County,
Texas),  claiming  that he is entitled to  compensation  under  a
Severance Agreement entered into between the Company and Mr. Sams
in  May  1998. The suit seeks damages representing,  in  summary,
compensation at his beginning salary rate for the period of  time
that  Mr.  Sams remains unemployed (or six months,  whichever  is
less),  the  amount of premiums paid for health  and  group  life
insurance coverage, housing costs and attorneys fees. The Company
disputes  the  claim for damages and will vigorously  defend  the
action.   No  liability  has  been  recorded  in  the   financial
statements  at  September  30,  1999  for  this  uncertainty   as
management   is  unable  to  determine  the  likelihood   of   an
unfavorable outcome of this matter or to estimate the  amount  or
range of potential loss should the outcome be unfavorable.

The Company is a party to certain litigation that, if resolved in
a  manner  adverse to the Company, could have a material  adverse
effect  on  the Company's liquidity and capital resources.   (See
NOTE E - CONTINGENCIES to the interim financial statements.)

From  time  to  time  the  Company  may  publish  forward-looking
statements  relating  to  such matters as  anticipated  financial
performance,  business prospects, technological development,  new
products,   research  and  development  activities  and   similar
matters.  The Private Securities Litigation Reform  Act  of  1995
provides  a safe harbor for forward-looking statements. In  order
to  comply  with the terms of the safe harbor, the Company  notes
that  a  variety  of  factors could cause  the  Company's  actual
results  and experience to differ materially from the anticipated
results or other expectations expressed in the Company's forward-
looking  statements.   When used in this  discussion,  the  words
"expects," "believes," "anticipates" and similar expressions  are
intended  to identify forward-looking statements. Such statements
are  subject to certain risks and uncertainties which could cause
actual  results  to differ materially from those  projected.  The
risks   and   uncertainties  that  may  affect  the   operations,
performance,  development and results of the  Company's  business
primarily   include  completion  of  existing   battery   orders,
uncertainty  as  to  receipt of additional orders,  inability  to
obtain  additional  debt  or  equity  financing,   financing  and
battery  sales. Readers are cautioned not to place undue reliance
on  these forward-looking statements which speak only as  of  the
date  hereof.  The Company undertakes no obligation to  republish
revised   forward-looking  statements  to   reflect   events   or
circumstances after the date hereof or to reflect the  occurrence
of  unanticipated  events.  Readers are also urged  to  carefully
review  and consider the various disclosures made by the  Company
which  attempt to advise interested parties of the factors  which
affect the Company's business in this report and in the Company's
periodic  reports on Forms 10-K and 8-K filed with the Securities
and Exchange Commission.

Qualitative and Quantitative Disclosures About Market Risk

The  Company  does not hold financial investments or  instruments
subject  to market risk, therefore disclosures about market  risk
are not applicable.


                   Part II - Other Information
Item 1.   Legal Proceedings

In  September  1996, the Company received a demand from  HBTL  to
arbitrate damage claims for alleged breach of the Agreement. HBTL
claimed  damages of approximately $5.1 million for  its  expenses
and  lost  profits related to the Agreement. The Company disputes
the claim for damages and will vigorously defend any action taken
by  HBTL  to pursue the claims. The Company also filed a petition
in  State  Court  in Travis County, Texas, seeking,  among  other
things,  a  declaratory  judgment  that  HBTL  had  no  right  to
arbitration  or monetary relief. HBTL contested jurisdiction  and
removed  the proceedings to the U.S. Federal District Court.  The
Federal District Court to which the action was removed ruled that
it did not have personal jurisdiction over HBTL and therefore had
no  power  to hear the case. The Company filed an appeal  in  the
U.S.  Fifth Circuit Court of Appeals from the final judgment  and
rulings in the Federal District Court, which denied jurisdiction.
The  appeal was successful and the case was remanded to the  U.S.
Federal District Court which ruled in favor of the Company in 1999.

The   Company  was  sued  in  October,  1999  by  a  vendor   for
approximately $12,000 for past due invoices, attorney's fees  and
court costs.  This lawsuit has not yet been settled.

The Company was sued in May, 1999 by a vendor for approximately
$11,000 for past due invoices, attorney's fees and court costs.  The
Company has subsequently paid the amount due the vendor, including
attorney's fees.  The lawsuit was dismissed.

Item 2.   Changes in Securities

The Company sold 800,000 shares of its Common Stock to Kamkorp at
a  price of $1.00 per share in cash during the first quarter.  Of
these  shares, 600,000 were issued during the quarter and 200,000
were issued later, although the subscription price receivable for
these  later-issued  shares is reflected in paid  in  capital  at
March 31, 1999. The Company issued an additional 1,300,000 shares
of  its Common Stock to Kamkorp at a price of $1.00 per share  in
cash  during the second quarter of 1999.  The Company  issued  an
additional  680,000 shares of its Common Stock to  Kamkorp  at  a
price  of  $1.00  per share in cash during the third  quarter  of
1999.

There  were  no  underwriters  involved  in  the  sale,  and   no
underwriting discounts or commissions. The securities  were  sold
pursuant  to exemptions under Section 4(2) of the Securities  Act
of 1933 and Regulation D thereunder; the offering was to a single
sophisticated, accredited investor in a transaction not involving
public solicitation or advertising.

Item 3.   Defaults on Senior Securities

     None.

Item 4.   Submission of Matters to a Vote of Security Holders

     None.

Item 5.   Other Information

     None.

Item 6.   Exhibits and Reports on Form 8-K

(a)  Exhibits

      4.    Kamkorp Limited Stock Option Agreement
     10.    Consulting Agreement-W. Laubach
     27.    Financial Data Schedule.

(b)  Reports on Form 8-K.

     Reports   on  Form  8-K  filed  during  the  quarter   ended
     September 30, 1999 were:

       August 11, 1999   Resignation of Ernst & Young as independent auditors
       October 7, 1999   Amended-Resignation of Ernst & Young as
         independent auditors


                           SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.


Date:   November 15, 1999

                               ELECTROSOURCE, INC.



                                        /s/
                               Benny E. Jay
                               President and Chief Executive Officer


                                        /s/
                               Donald C. Perriello
                               Vice President/Finance, Treasurer and
                                 Chief Accounting Officer




                     Washington, D.C.  20549




            ________________________________________

                           EXHIBITS TO
                            FORM 10-Q


     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
             THE SECURITIES EXCHANGE ACT OF 1934


              For the quarter ended              Commission File
               September 30, 1999                 Number 0-16323



           __________________________________________


                       ELECTROSOURCE, INC.
     (Exact name of Registrant as specified in its charter)

           Delaware                         742466304
(State or other jurisdiction of  (I.R.S. Employer Identification No.)
incorporation or organization)

 2809 Interstate 35 South, San                78666
         Marcos, Texas
(Address of principal executive             (Zip Code)
           offices)

       Registrant's telephone number, including area code:
                         (512) 753-6500

   Securities registered pursuant to Section 12(b) of the Act:
                              None

   Securities registered pursuant to Section 12(g) of the Act:

             Common Stock, par value $1.00 per share
                        (Title of Class)




INDEX TO EXHIBITS


No.                       Description                       Page

 4           Kamkorp Stock Option Agreement

10           Consulting Agreement-W. Laubach

27           Financial Data Schedule