EEEI FLYS, BUT SHOULD IT HAVE?

SHOULD INVESTORS BELIEVE the hybrid hype?

Shares of Electro Energy (EEEI) surged 49% to $4.45 Thursday after the battery maker agreed to design a prototype battery pack that could be used to power a Toyota Prius. The agreement, which involves no payment to the company, was inked with the California Cars Initiative, or CalCars, a nonprofit group that's trying to create a market for plug-in hybrid cars. Toyota Motor (TM), the manufacturer of the Prius, has no connection to the deal.

"We have no dealings with Electro Energy," says Nancy Hubbell, a spokeswoman for Toyota. "And the chances of that happening are minimal. When it comes to the development of our cars, that is done in-house. We have engineers in Japan developing our hybrid systems. And our batteries come from Panasonic. It is one of our business partners, and that is a long-standing relationship."

Though Electro Energy didn't claim any relationship with Toyota in its press release, it's not surprising that it wants to connect its name to the wildly popular Prius. With gasoline prices so high, the Prius, introduced in 1997, is the best-selling hybrid in the world. Toyota expects this year to sell more than double the 50,000 vehicles that it sold in 2004. The Japanese auto maker projects its hybrid sales will hit a million vehicles by 201