Kyodo News (via Street Insider) is reporting that Toyota and Tesla will co-develop a prototype electric car by year end and this is according to Toyota sources. 

It was announced on May 21st that Toyota would invest $50 million in Tesla Motors and would partner to produce the Model S electric sedan at a recently closed Toyota/GM plant in Fremont, California.  It’s not clear what the prototype will be, but I assume it will be a prototype of the Model S which is expected to begin selling in 2012.

In recent days, that well publicized partnership has been reduced to more of a loose arrangement between the two companies that hinges on the success of a Tesla IPO which is expected sometime this year.  This according to a recent SEC filing by Tesla.  Not only does the $50 million investment in Tesla stock hinge on a successful IPO, but so does the purchase of the recently closed plant in Fremont.  Also revealed in the statement were financial results which show $112 million in revenue for 2009, but off to a slow start this year with just $20.8 million in revenue in the first quarter.  It’s a company that continues to bleed red ink and they acknowledge that the success of the Model S is crucial to profitability.  Since inception in 2003, Tesla has burned through nearly $300 million. 

While the hype is certainly there, a Tesla IPO is anything but a certain success.  The market is much more discerning these days and typically doesn’t treat companies that burn through cash very well. 

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