Oct. 25, 2012

Oct. 25, 2012

Arotech Awarded Contract To Develop Lithium Battery For Hybrid Electric Vehicles

First prototypes to be delivered in the first quarter of 2013

Arotech Corporation (Nasdaq: ARTX) announced today that its Battery and Power Systems Division has received an order to develop prototypes for a lithium battery for hybrid electric vehicles.

The order to develop three prototype batteries was placed by an unnamed German automotive supply company. The first prototypes are due to be delivered in the first quarter of 2013.

This contract marks Arotech's entry into the fast-growing field of hybrid electric vehicles. Through the end of September 2012, more than 5.2 million hybrid electric vehicles had been sold worldwide.

Arotech has substantial know-how in large format battery technology, having in the past, under its Electric Fuel name, successfully developed zinc air batteries that powered electric vehicles more than 250 kilometers in a single discharge.

"This is our second notable contract for large format lithium ion, and represents a strategic step to balance our significant and growing business in the military power sources market," noted Arotech Chairman and CEO Robert S. Ehrlich. "Having learned important lessons from our previous foray into the electric vehicle market, we are determined to minimize risk by only undertaking profitable projects," continued Ehrlich. "We believe that between grid storage and electric vehicles there is significant promise for large format lithium ion. With our extensive know-how in lithium batteries and their power management, this is the ideal time for us to enter this emerging market," concluded Ehrlich.

About Arotech's Battery and Power Systems Division

Arotech's Battery and Power Systems Division is a leading provider of primary and rechargeable batteries and chargers for defense and other military applications. Arotech develops and produces high power zinc-air batteries and is believed to be the sole supplier of this technology to the U.S. military. In addition, Arotech develops high-end primary and secondary batteries and associated chargers and has vast experience in working with government agencies, the military and large corporations.

The Battery and Power Systems Division consists of Electric Fuel Battery Corporation and Epsilor-Electric Fuel Ltd.

About Arotech Corporation
Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and homeland security markets. Arotech provides multimedia interactive simulators/trainers and advanced zinc-air and lithium batteries and chargers. Arotech operates through two major business divisions: Training and Simulation, and Batteries and Power Systems.
Arotech is incorporated in Delaware, with corporate offices in Ann Arbor, Michigan and research, development and production subsidiaries in Alabama, Michigan and Israel.

Except for the historical information herein, the matters discussed in this news release include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such state-ments are reasonable, readers are cautioned not to place undue reliance on these forward-looking state-ments, as they are subject to various risks and uncertainties that may cause actual results to vary materially. These risks and uncertainties include, but are not limited to, risks relating to: product and technology development; the uncertainty of the market for Arotech's products; changing economic conditions; delay, cancellation or non-renewal, in whole or in part, of contracts or of purchase orders; Arotech's ability to remain listed on the Nasdaq Stock Market in accordance with the Nasdaq's $1.00 minimum bid price and other continued listing standards; and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other filings with the Securities and Exchange Commission. Arotech assumes no obligation to update the information in this release. Reference to the Company's website above does not constitute incorporation of any of the information thereon into this press release.

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