ZAP to sell $24.5 million in common stock to Fusion Capital

SANTA ROSA, California, Wednesday, July 29, 2004 – Advanced technology vehicle company ZAP (OTC BB:ZAAP) announced today that it has entered into a $24.5 million common stock purchase agreement with Fusion Capital Fund II, LLC, a Chicago based institutional investor, whereby Fusion Capital has initially purchased 200,000 shares of ZAP’s common stock at a price of $2.50 per share. Fusion Capital has committed to purchase an additional $24.0 million of common stock over a 40-month period at a purchase price based upon the market price of ZAP's common stock on the date of each sale without any fixed discount to the market price. The proceeds will be utilized to accelerate the development and commercialization of ZAP's full-line of advanced technology vehicles and to purchase additional inventory of Smart Cars. Steven Schneider, CEO of ZAP commented, "The proceeds from this financing will allow us to fund inventory build up of Smart Cars as we anticipate EPA approval which will allow us to start selling Smart Cars." Gary Starr, Chairman of ZAP stated, "This financing with Fusion Capital will provide the Company with a value-added partner and a flexible source of capital. We are very excited about this transaction and look forward to a long relationship with Fusion Capital." Funding of the additional $24.0 million does not commence until the Securities & Exchange Commission has declared effective a registration statement covering the shares sold to Fusion Capital. The Company has the right to control the timing and the amount of stock sold to Fusion Capital. ZAP also has the right to terminate the agreement at any time without any additional cost. Fusion Capital has agreed not to engage in any direct or indirect short selling or hedging of the common stock in any manner whatsoever. A more detailed description of the transaction is set forth in ZAP's report on Form 8-K today filed with the SEC.