Zongshen PEM Power Systems Inc. Launches its Premium Blue Sea E-Bikes in China

• Approximately 1,000 dealers attend the official product launch
• Red Sea sales exceed 60,000 units in 2007

January 17, 2008 — Vancouver, British Columbia — Zongshen PEM Power Systems Inc. ("ZPP" or "the Company") (TSXV:ZPP), is pleased to announce the launch of its Blue Sea e-bikes, attended by 1,000 Zongshen branded dealers and distributors at the headquarters of its largest shareholder, Zongshen Industrial Group, in Chongqing, China.

The Company's initial line of e-bikes, called Red Sea were launched in early 2007, and are positioned in the top end of the market providing features and benefits similar to the best quality of e-bikes currently offered in China. The Blue Sea e-bikes are a premium e-bikes with enhanced battery technology, design and operating system. The Company believes that the Blue Sea e-bike products offer a combination of features and benefits such as smaller batteries that deliver more power and drive time between charges, two wheel drive and more attractive styling, that offer significant added value to the consumer and position ZPP as the leading provider of high-quality e-bikes. The Blue Sea products include patented battery technology and design that is expected to allow ZPP to charge a premium price and generate improved margins.

The first three models of the Blue Sea e-bike line were launched at the annual sales conference for the 1,000 exclusive Zongshen branded dealers and distributors, where the Zongshen Industrial Group also introduced its new 2008 gas motorcycle models, clothes and accessories. The Blue Sea e-bikes will also be introduced to the approximately 4,000 additional dealers and distributors that sell Zongshen Industrial Group's gas motorcycles and accessories. ZPP plans to broaden the Blue Sea e-bike line by launching at least 10 models in 2008.

"We are very pleased that orders for over 11,000 Blue Sea e-bikes were placed on the first day of our launch," noted Mr. Yao Li, President and CEO of Zongshen PEM Power Systems Inc. "We are well positioned to be a leader in China for e-bikes, with two years of extensive market research used to develop a premium e-bike line with value add features that customers told us they wanted, gross proceeds of over $35 million from the bought deal financing that closed in November 2007, and the recently signed Master Support Agreement with the Zongshen Industrial Group that provides ZPP access to our major shareholder's 5,000 dealers and distributors, production and design expertise, technology and brand."

The Company is also pleased to report Red Sea e-bike unit sales of approximately 29,608 during the fourth quarter of 2007, representing 63% growth compared with the third quarter of 2007. Total unit sales for fiscal 2007 are estimated to be over 60,000 compared with the previously stated guidance of 50,000 units. (See press release issued January 7, 2008)

The e-bike market in China has grown dramatically over the past six years, with studies estimating sales to exceed 21 million units in 2007, up from 1.6 million in 2002, representing a 68% compound annual growth rate (CAGR). The market drivers include the Chinese government's implementation of a 5-year plan to radically decrease carbon-based emissions, and the banning of new sales of gas motorcycles in some cities in China. In addition, an increasing percentage of the Chinese population are looking to upgrade their modes of transportation and e- bikes, with prices that range from about $200 to $500, are affordable alternatives compared to cars and motorcycles.

The Chinese market is currently served by an estimated 2,000 e-bike manufacturing companies, the largest of which has an estimated 3% market share. This highly fragmented market provides an opportunity for ZPP to compete with better technology, leveraging the brand, production scale and distribution of the Zongshen Industrial Group. With production capacity in excess of 2 million motorcycles and 4 million motorcycle engines and some 5,000 dealers and distributors in China, The Zongshen Industrial Group has established itself as a leading brand for motorcycles in China and the region, attracting leading international manufacturers as joint-venture partners.

On January 7, 2008, Zongshen Industrial Group and ZPP announced the signing of a Master Support Agreement whereby the Zongshen Industrial Group will not compete with ZPP, and conduct all of its alternative power source business through ZPP, including the development and sale of all products and services related to electric vehicles, fuel cells, solar power and wind power.

The first products to be commercialized are electric bikes and motorcycles ("e-bikes"). Extensive market research, which is ongoing, was conducted in 2006 and the e-bike division commenced production and sales in early 2007. With current annual capacity to produce 200,000 e-bikes, and a second facility going into production in 2008, the Company plans to significantly grow sales to more than 260,000 units for fiscal 2008 versus a total of over 60,000 units in 2007.

About Zongshen PEM Power Systems Inc.

Zongshen PEM Power Systems Inc. is a public company trading under the symbol ZPP on the TSX Venture Exchange. The Company is engaged in the commercialization of alternate power systems including batteries, fuel cells and solar power, for a variety of consumer and industrial applications. The Company manufactures low-cost, high quality, environmentally friendly electric motorcycles, electric bicycles and other e-vehicles in China for the domestic and international market. Zongshen PEM Power System's largest shareholder is Zongshen Industrial Group, one of China's largest manufacturers and distributors of motorcycles, engines, and power equipment.

About Zongshen Industrial Group

Zongshen Industrial Group was founded in 1992, and now consists of 30 totally or majority owned subsidiaries including Chongqing Zongshen Power Machinery Co., which is listed on the Shenzhen Stock Exchange. The Company employs in excess of 13,000 employees with assets in excess of RMB 4 billion Yuan. Zongshen Industrial Group implements the development strategy of related diversification within the thermodynamic machinery industry. Its engine products mainly include motorcycle engines, mini-car engines, speedboat engines, and general-purpose machinery. Its end products mainly include motorcycles, speedboats and other power equipment. Zongshen Industrial Group now has an annual production capacity of 2,000,000 motorcycles, 50,000 mini vans, 3,000,000 motorcycle engines, 5,000,000 general- purpose engines, and 100,000 car engines. Zongshen Industrial Group has established a leading brand for motorcycles in China attracting some of the world's largest motorcycle manufacturers as joint venture partners.

For more information please contact:
Ali Mahdavi
Zongshen PEM Power Systems Inc.
Vice President, Corporate Finance & Investor Relations
416.962.3300
1.877.775.8734
amahdavi@zongshenpem.com

The statements made in this presentation that are not historical facts are forward- looking statements that represent management's beliefs and assumptions based on currently available information. These statements may relate to matters such as expected financial performance, business prospects, technological developments, and development activities and like matters. These statements involve risks and uncertainties, including but not limited to the risk factors described in reporting documents filed by the Company. Actual results could differ materially from those projected as a result of these risks and should not be relied upon as a prediction of future events. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.