FOR IMMEDIATE RELEASE January 7, 2004

Maxwell Improves Cost Structure and Efficiency, Augments Cash Reserves, Positioning Company for Growth & Profitability

Ultracapacitors Are Centerpiece of High-Reliability, High Margin, Product Strategy; Executive Team Ties Compensation to Financial Performance Improvement

SAN DIEGO, CA — Maxwell Technologies, Inc. (Nasdaq: MXWL) announced today that it has completed several steps to reduce operating expenses, improve efficiency and sharpen its focus on its core high- reliability, high-margin product lines to position the company for growth and profitability in 2004.

Dr. Richard Balanson, Maxwell's president and chief executive officer, said that recently completed and ongoing actions to eliminate non-core products, strengthen the company's balance sheet, increase sales of proprietary core products and improve overall efficiency and financial performance include:

• Sale of the non-core Metar winding equipment business in Switzerland and phase-out of low-margin, magnetics-based, power systems products, enabling the company to focus exclusively on its proprietary, high-margin ultracapacitor, microelectronics and high-voltage capacitor products.
• Sale of a vacant facility in San Diego, Calif., eliminating virtually all long-term debt and generating net cash proceeds of approximately $5.8 million.
• Negotiation of a new U.S. credit facility to increase the company's total credit availability to more than $5 million.
• Completion or acceleration of several key ultracapacitor and microelectronics product development initiatives and full automation of high-voltage capacitor production.
• Ongoing programs within each of the company's three core business units to improve productivity and reduce material costs maintaining high product yields.
• Significant payroll expense savings as a result of headcount reductions during the fourth quarter and a voluntary 30 percent reduction in 2004 base pay for the executive management team and board of directors, which is linked to an incentive program through which the executive team earns cash bonuses only when:
  1. the company exceeds breakeven for a fiscal quarter, and
  2. achieves a net profit of at least $1 million for the full 2004 fiscal year, after any bonus payments.

"Our shareholders have been very supportive in allowing this management team time to rebuild the company around the three core, high-reliability, product lines upon which Maxwell's future is based, and now it is time for the business to perform," Balanson said. "We believe in this company and our strategy and we are literally betting our paychecks on turning the corner to profitability this year."

Balanson said that the actions outlined above have reduced the company's quarterly breakeven revenue threshold from more than $15 million at the beginning of 2003, to less than $12 million with the projected revenue mix for the first quarter of 2004. He noted that the company entered the new year with cash reserves of more than $10 million, and expects to become profitable and cash flow positive from ongoing operations during the second half of 2004.

"The lengthy restructuring and clean-up process we began at the end of 1999 is essentially complete, and we believe that our current cash reserves are sufficient for the foreseeable future," Balanson said. "The core products that will drive Maxwell's growth in 2004 and beyond are 'best of breed' in the markets they serve, are protected with strong intellectual property positions, and have favorable cost positions and compelling value propositions that enable them to capture unusually high margins."

Maxwell sells reliability. We develop, manufacture and market electronic components and systems that perform reliably for the life of the applications into which they are integrated. Our BoostCap® ultracapacitors and ultracapacitor-based energy storage systems uniquely address applications in transportation and consumer and industrial electronics. Our CONDIS high-voltage grading and coupling capacitors are used in electric utility infrastructure and other applications involving transport, distribution and measurement of high voltage electrical energy. Our radiation-mitigated microelectronic products include power modules, memory modules and single board computers that primarily address applications in aerospace.

This news release contains forward-looking statements that are subject to risks and uncertainties. These include development and acceptance of products based on new technologies, demand for original equipment manufacturers' products reaching anticipated levels, general economic conditions in the markets served by the company's products, cost-effective manufacturing of new products, the impact of competitive products and pricing and risks and uncertainties involved in foreign operations. These and other risks are detailed from time-to-time in the Company's SEC reports, including the report on Form 10-K for the fiscal year ended December 31, 2002. Actual results may differ materially from those projected. These forward-looking statements represent the Company's judgment as of the date of this news release. The Company disclaims any intent or obligation to update these forward-looking statements.

Contact:
Michael Sund
Maxwell Technologies
(858) 503-5171

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