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 March 31, 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:  9,721,631 shares as of May 12, 1999.



INDEX TO FINANCIAL STATEMENTS
March 31, 1999


ELECTROSOURCE, INC.              COMMISSION FILE NUMBER   0-16323


PART I - FINANCIAL INFORMATION

  Item 1.  Financial Statements.

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

     Condensed Statements of Operations for the three months
       ended March 31, 1999 and 1998 (Unaudited)          Page  4

     Condensed Statements of Cash Flows for the three months
ended
       March 31, 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 12

  Item 3.  Defaults On Senior Securities                  Page 13

  Item 4.  Submission of Matters to a Vote of Security HoldersPage 13

  Item 5.  Other Information                              Page 13

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

INDEX TO EXHIBITS                                         Page 17




Part I - Financial Information
Item 1.  Financial Statements
Electrosource, Inc.
Condensed Balance Sheets

                                           March 31,      December
                                           1999           31, 1998
                                           (Unaudited)
ASSETS                                                    
                                                          
CURRENT ASSETS                                           
  Cash and cash equivalents                $ 20,784    $ 207,246
  Trade receivables                         155,521      109,520
  Inventories                               217,223      350,464
  Prepaid expenses and other assets          20,089       29,938
TOTAL CURRENT ASSETS                        413,617      697,168
                                                         
PROPERTY AND EQUIPMENT (net of                           
accumulated depreciation
  of $3,794,817 in 1999 and $4,028,762 in  3,271,004     3,462,157
1998)
                                                         
INTANGIBLE ASSETS (net of accumulated                    
amortization
  of $2,093,602 in 1999 and $2,046,397 in  955,072       1,002,277
1998)
                                                         
OTHER ASSETS                                   54,750        55,500
TOTAL ASSETS                               $4,694,443    $5,217,102
                                                         
LIABILITIES AND SHAREHOLDERS' EQUITY                     
                                                         
CURRENT LIABILITIES                                      
  Accounts payable                         $   913,705   $  948,528
  Accrued liabilities                        1,404,997    1,308,346
  Deferred revenue and advance payments        388,531      649,893
   on batteries
  Current portion of capital lease              79,321       77,006
   obligations
TOTAL CURRENT LIABILITIES                    2,786,554    2,983,773
                                                         
CAPITAL LEASE OBLIGATIONS (less current         50,793       71,512
portion)
                                                         
SHAREHOLDERS' EQUITY (DEFICIT)                           
  Common Stock, par value $1.00 per                      
   share, authorized 50,000,000 shares;
   issued and outstanding 9,085,698 in
   1999 and 8,434,531 in 1998                9,085,698     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                          51,675,439    51,446,508
  Accumulated deficit                     (58,436,378)  (57,251,559)
                                            1,857,096     2,161,817
TOTAL LIABILITIES AND SHAREHOLDERS'       $ 4,694,443   $ 5,217,102
 EQUITY                                                         
                                                          
See notes to financial statements.                        

Electrosource, Inc.
Condensed Statements of Operations (Unaudited)



                                   Three Months Ended
                                   March 31,
                                    1999        1998
Revenues                                        
Battery sales                       $  202,024   $  244,975
Project revenue                        169,633       49,015
Interest income                             59        9,584
                                       371,716      303,574
Costs and expenses                              
Manufacturing                          721,621      992,604
Selling, general and administrative    290,981      577,713
Research and development               275,585      596,111
Technology license and royalties        25,000       25,000
Depreciation and amortization          238,358      466,211
Interest expense                         4,990      202,257
                                     1,556,535    2,859,896
Loss before income taxes            (1,184,819)  (2,556,322)
                                                
Income taxes                        -           -
                                                
Net loss                           $(1,184,819) $(2,556,322)
                                                
Net loss per common share               $(0.14)      $(0.56)
                                                
Average common shares outstanding    8,663,213    4,534,531
                                                
See notes to condensed financial                
statements.


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

                                     Three Months Ended
                                     March 31,
                                        1999           1998
OPERATING ACTIVITIES                             
  Net loss                           $(1,184,819)   $(2,556,322)
  Adjustments to reconcile net loss              
   to net cash used in operating
   activities:
    Equity instruments for          -                  200,000
     consulting services
    Depreciation and amortization       238,358        556,246
    Interest expense paid in        -                  102,500
     convertible notes payable
    Non-cash lease expense               33,804        106,536
  Changes in operating assets and                
   liabilities:
   (Increase) decrease in trade        (46,002)       278,719
     receivables
    Decrease in inventories             133,241         27,658
    Decrease in prepaid expenses         10,599         91,635
     and other assets
    Increase (decrease) in accounts             
     payable and accrued liabilities     28,025       (429,056)
    Increase (decrease) in deferred             
     revenue and advance payments on   (261,362)       725,952
     batteries
CASH USED IN OPERATING ACTIVITIES     (1,048,156)      (896,132)

                                                 
INVESTING ACTIVITIES                             
  Purchases of property and          -                   (2,975)
   equipment, net
CASH USED IN INVESTING ACTIVITIES    -                   (2,975)
                                                 
FINANCING ACTIVITIES                             
  Proceeds from issuances of                     
    convertible notes payable            -            1,000,000
    and related warrants to purchase             
Common Stock
  Payment of notes payable and          (18,404)        (17,602)
   capital lease obligations
  Proceeds from issuances of common     880,098               -
   stock, net
CASH PROVIDED BY FINANCING              861,694         982,398
ACTIVITIES
                                                 
INCREASE (DECREASE) IN CASH AND CASH             
       EQUIVALENTS                    (186,462)          83,291
                                                 
Cash and cash equivalents at           207,246          782,918
  beginning of period
                                                 
CASH AND CASH EQUIVALENTS AT END OF  $  20,784         $866,209
  PERIOD                                           
                                                 
                                                 
See notes to financial statements.               

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                   $159,638    $147,235
      Work in progress                  35,021      61,499
      Finished goods                    22,564     141,730
                                                  
                                      $217,223    $350,464


NOTE C - PROPERTY AND EQUIPMENT

                                      1999        1998
                                                  
      Office equipment                $  801,610   $  801,610
                                                  
      Production and lab equipment     5,388,291    5,388,291
      Leasehold improvements             875,920    1,301,018
                                       7,065,821    7,490,919
      Less - accumulated              (3,794,817)  (4,028,762)
      depreciation and amortization
      Total Property and Equipment    $3,271,004   $3,462,157
  


NOTE D - 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 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.
A decision on the appeal is expected at any time. If the appeal
is successful, the U.S. Federal Court will have jurisdiction to
hear the case. No liability has been recorded in the financial
statements at March 31, 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 resolution of this
matter could have a material adverse effect on the financial
position of the Company.

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 E - 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 F - 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.
Assuming purchase of the full 6,000,000 shares available under
the Agreement and full exercise of the option to purchase
3,000,000 shares, Kamkorp is the beneficial owner of 9,000,000
shares representing 66.2% of the Company's Common Stock. As of
May 12, 1999, Kamkorp has paid for and been issued 5,125,000
shares at $1.00 per share, representing 52.7% of the Company's
outstanding Common Stock at that date. Kamkorp management has
stated that the remaining and future purchases of Common Stock
(which may be more or less than those defined in the Agreement)
will be made in the amount and timeframe they deem necessary to
sustain the Company's operations and execute the business plan
approved by Kamkorp, rather than as defined in the schedule set
forth in the Agreement. Payments to date have been made in
amounts necessary to meet the Company's payroll and rent
obligations. Although Kamkorp has provided a substantial amount
of financing to the Company to date, as a private company Kamkorp
is not legally required to, and has not, provided sufficient
information to the Company to allow the Company to determine the
financial ability of Kamkorp to make the remaining purchases of
Company Common Stock.

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 quarter ended March 31, 1999, existing battery orders
and contract work had 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. The Company has approximately
$800,000 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 threatened legal action for non-payment of invoices. Cash
payments from Kamkorp have been sufficient to fund payroll and
rent obligations, but not to pay in full the outstanding accounts
payable balances.

Funding from Kamkorp beyond the minimum $300,000 per month
specified in the Agreement, additional battery orders, or other
financing will be required in the second quarter of 1999 to
continue operations and to regain and maintain compliance with
the minimum listing standards of The Nasdaq Stock Markets
("Nasdaq"). The Company is discussing the possibility of
accelerated or additional financing from Kamkorp, which could be
provided under the terms of the Agreement through Kamkorp's
exercise of all or a portion of its option to purchase 3,000,000
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). The
Company was not in compliance with the requirement before the
completion of the financing transactions with Kamkorp and the
subsequent debt extinguishment, both completed in June 1998. In
April 1998, the Company received notice from Nasdaq that it must
present a plan for compliance with listing standards on or before
April 16, 1998. The Company submitted such a plan on April 15,
1998. On May 13, 1998, the Company was notified by Nasdaq that
its plan was not accepted and it would be delisted from Nasdaq
effective the close of business on May 20, 1998. The Company
filed a request for an oral hearing regarding the decision. The
hearing was held on June 18, 1998. On July 1, 1998, the Company
received written notice from Nasdaq that its shares would
continue to be listed on the Nasdaq Small Cap Market, as the
Company had regained compliance with the financial listing
criteria and had provided a plan for continued compliance. The
success of this plan was contingent upon equity funding
anticipated to be provided by Kamkorp in accordance with the
terms of the Agreement and successful execution of the Company's
business plan which included increased revenues and reduced
operating losses and/or additional equity funding. The failure of
anticipated orders (including scheduled battery shipments to
Kamkorp's wholly owned subsidiary Electrosource International
Limited ("EIL") under a purchase order for 5800 batteries
received by the Company in July 1998) to materialize in the
second half of 1998 and the first quarter of 1999 caused the
Company to fall short of the performance forecast in the
submissions to Nasdaq. Additionally, 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
again 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 has complied with this request,
but has not received a response from Nasdaq. Assuming that the
Company can achieve compliance in the near term through
additional investments by Kamkorp, it will be necessary to obtain
significant new orders from Kamkorp and others to maintain
compliance with the Nasdaq listing requirements in the future.

At this time, the consequences to the Company of the current non-
compliance are unknown. 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 declined from $207,246 to $20,784
during the three months ended March 31, 1999, as a result of
continued operating losses in excess of equity sales. Subsequent
to March 31, the Company has sold an additional 425,000 shares of
its Common Stock to Kamkorp at $1.00 per share to provide needed
working capital. Inventories declined from $350,464 to $217,223,
despite an increase in raw materials inventories. This decline in
work in process and finished goods reflects a combination of
shipments to fill orders outstanding at year-end with the absence
of firm orders against which to build finished goods inventories
in the first quarter.

The Company sold an additional 800,000 shares of Common Stock to
Kamkorp for $1.00 per share in the quarter ended March 31, 1999;
participants in the Company's stock option plans exercised
options for 51,000 shares of Common Stock in the aggregate for a
total consideration of approximately $80,000.

Results of Operations:

Revenues.  The Company had battery sales of approximately
$202,000 for the three months ended March 31, 1999 compared to
$245,000 for the three months ended March 31, 1998. Approximately
64% and 58% of 1999 and 1998 battery sales, respectively, 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. The
Company does not expect 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. 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 test is expected to
conclude in the second quarter of 1999.  If the results of such
tests are favorable, the New York City Transit Authority may
place an order for the hybrid buses powered by Horizon batteries
in the second or third 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 is in the final round of negotiations on the terms of
a purchase order for 8,000 batteries from EIL for delivery
beginning during the second half of 1999. Parties contemplate
that the order, when finalized, will be accompanied by a cash
down payment, which will replace a previous order for 5,800
batteries from EIL. EIL took delivery of 2,062 batteries under
the previous order and paid an amount equal to fifty percent of
the purchase price of the entire order. The Company will retain
the entire amount paid under the previous order. If finalized,
the new order will represent 4,262 net new batteries ordered,
given the undelivered portion of the previous order which has now
been cancelled.

Management expects to receive Federal Aviation Administration
("FAA") certification of its battery design used in helicopter
starting applications in the second quarter of 1999, at which
time sales of these batteries are expected to commence; however,
the timing and amount of these sales remains uncertain.

The Company had project revenue of approximately $170,000 for the
three months ended March 31, 1999 compared to $49,000 for the
three months ended March 31, 1998. All of the 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 months ended March 31, 1999 compared to the three months
ended March 31, 1998. Manufacturing costs were lower in 1999
primarily due to savings associated with the non-production of
batteries in the first quarter 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 months ended March 31, 1999 compared to the same period in
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 remain at approximately the same level throughout
1999.

Research and development costs have decreased for the three
months ended March 31, 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
months ended March 31, 1999 compared to the same period in 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 F - 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. The Company's closing market
price as reported by Nasdaq on April 30, 1999 was $1.406.  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 March 31, 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 March 31, 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 D - 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, continued willingness
and ability of Kamkorp and its affiliates to provide agreed upon
financing, currency controls and other uncertainties arising from
Malaysia and Far East economies upon which the Company is
dependent for equity financing and battery sales, delisting of
the Company's Common Stock on Nasdaq, unanticipated costs or
problems relating to Y2K compliance, delays in shipment or
cancellation of orders, timing of future orders, customer
reorganization, fluctuations in demand primarily associated with
governmental mandates for the production of zero emission
vehicles and the ability to successfully commercialize the
Horizon battery.  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.

Part II - Other Information
Item 1.   Legal Proceedings

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 March 31, 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.

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.

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

     27.  Financial Data Schedule.

(b)  Reports on Form 8-K.

     Reports on Form 8-K filed during the quarter ended March
     31, 1999 and up to the date of this filing on Form 10-Q
     were:

                                                    None.
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: May 17, 1999                 ______/s/______________________
ELECTROSOURCE, INC.                William F. Griffin
                                   Chairman, President
                                   and Chief Executive Officer



                                   ______/s/______________________
                                   Roger Musson
                                   Director and Chief Accounting
                                   Officer (Acting)




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
               March 31, 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
                                                         
27   Financial Data Schedule                             17