Elon Musk’s electric car company Tesla Motors took a downhill slide on the stock market Thursday morning.

The 9 percent drop in shares came in response to Musk’s announcement Wednesday that the company experienced a net loss of $49.8 million for the first quarter, reports The Wall Street Journal.

Musk explained in a letter to shareholders that the drop in quarterly revenue was a result of the company’s aggressive research and development campaign.

The Silicon Valley billionaire expects costs to continue to rise over the next quarter, by about 30 percent for research and development and 15 percent for selling, general and administrative costs. Overall, he plans to invest between $680 and $850 over the next year.

Much of the investment funds are going towards Tesla expansion in to China, the construction of its massive battery plant, the “Gigafactory,” and the development of its new Model X vehicle.

Although Musk has not revealed the location of the Gigafactory, he told shareholders during a conference call on Wednesday that the company plans to break ground on the first potential site for the factory next month, and set will set up shop at a second location not long after.

The leading candidates for battery plant locations are Texas, Nevada, New Mexico, and Arizona. California was originally taken off the list of potential site locations because of its regulatory burdens and lengthy licensing process, but Musk said Wednesday that the Golden State is now back on the list of possibilities.

During the first quarter Tesla delivered 6,457 vehicles and produced even more cars than that, but was unable to meet all delivery demands because of the time-consuming logistics of transporting cars to European and Asian markets.

Musk is aiming to deliver at least 35,000 cars worldwide by the end of the year.

Some investors question the sustainability of Tesla because much of its demand and earnings are generated by tax subsidies.

Most recently, Tesla has gained popularity in Norway where electric vehicle customers do not need to pay any taxes on their purchase.

But this privilege has a finite life, the tax break will end when the country’s EV total reaches 50,000, or in 2017, whichever comes first.

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