But with high-profile electrified vehicle makers like Fisker and Coda struggling, the appetite in the U.S. for investing in electrified vehicle makers was slight.
Since he was visiting China regularly to work with suppliers, McQuary made an appointment with GSR Ventures, a venture capital company based in Beijing. It was a good move. GSR now helps fund Wheego.
"They have a long-term view of the new-energy sector and EVs in particular," McQuary says of his Chinese investor.
Despite early optimism in the U.S., the market for EVs and the technology that goes into them never has really taken off. In 2015, U.S. sales of plug-in hybrids and EVs actually dropped 5.2 percent to 116,099 units, according to Inside EVs.
Government support for the sector has remained tepid. That has left companies that bet on steady growth in demand for electrified vehicles struggling to survive.
In China, however, the government remains committed to growing plug-in hybrid and EV production and sales. That has given Chinese investors and Chinese companies the confidence to sink millions of dollars into U.S. companies with electrification technology.
Focus on China
Often, Chinese investors want to focus on the China market.
GSR was "happy to invest in us as long as we turned our eyes to China," McQuary says.
Though it has dealers and sales in the U.S., the Atlanta-based company now focuses on selling its small EVs -- used by municipal governments, at airports and as delivery vehicles -- in China.
He can't discuss sales volume or where the vehicles are manufactured, McQuary says. But the company is still in business, which it might not have been without the Chinese investment.
"China seemed like a much bigger chance for Wheego to be a big success," he says. "The subsidies they offer over there, and the government support and pressure for EVs to be successful, really trumps what they are doing in the U.S."
Smith Electric Vehicles also found a savior in China. The Kansas City, Mo.-based company manufactures medium-duty, commercial EVs. It sold around 800 EVs in the United States from 2010 to 2014 to customers including DHL and Coca-Cola, but it couldn't make money at such low volumes.
It needed cash and a bigger market so it could scale up. That came from Hong Kong-listed FDG Electric Vehicles, a Chinese company with two EV manufacturing plants in China as well as battery production and r&d operations. Smith, whose electric vans have logged millions of miles on U.S. roads, could provide added EV manufacturing expertise.
The Chinese company "had the resources, the money, the engineers [and] the government support, but they had no practical working knowledge" of how to produce an EV, says Bryan Hansel, former CEO of Smith.
China-U.S. joint venture
In 2014, FDG invested some $20 million directly in Smith, says Hansel. Then in May 2015, it invested another $15 million to form a joint venture, named Prevok. Hansel is Prevok's CEO.
The JV is producing a jointly designed, medium-duty electric van at a 2.6 million-square-foot plant in the east China high-tech hub of Hangzhou. Prevok plans to launch the van in the U.S. this year.
It will be imported initially, moving to local production as volume increases, Hansel says. Demand eventually will be global, he predicts.
Smith likely would not have had the luxury of such an undertaking if it worked with U.S. investors, Hansel says. With FDG, "they said, "Get started guys, and have fun.'"
The Chinese government's consistent financial support and policy push for development and sale of plug-in EVs underpins Chinese investors' longer-term view.
China has declared that it will have 5 million "new-energy" vehicles -- a category including battery-powered EVs, plug-in hybrids and hydrogen fuel cell EVs -- on the road by 2020. In practice, the recent focus has been on battery-powered EVs.
China's central and local governments have combined to offer consumers subsidies that can surpass the equivalent of $16,000 per vehicle.
That is more than half the price of the best-selling plug-in hybrid EV in China, the BYD Qin PHEV, which starts at the equivalent of $31,192. The best-selling pure EV in China, the Kandi Panda, costs $23,139, says Yale Zhang, managing director of consultancy Automotive Foresight in Shanghai.
In the U.S., federal subsidies top off at $7,500. Some states offer additional subsidies.
The Chinese government's largesse is not bottomless, however. Subsides for electric passenger vehicle purchases are scheduled to decrease, ending in 2021.
And despite subsidies, Chinese drivers have not enthusiastically embraced EVs. The lack of charging stations is one reason.
Sales of EVs did surge in 2015, however, more than quadrupling to 331,092 vehicles.
The growth in sales was largely due to local government purchases, says Zhang.
The central government in Beijing ordered Chinese cities to meet new-energy vehicle purchase targets, he says. That caused a surge in production and sales. The percentage of new-energy vehicle sales accounted for by commercial vehicles rose to 45.5 percent in 2015 from 38.4 percent in 2014, according to Automotive Foresight.
Also, Beijing in February ordered local governments to make 50 percent of all new fleet vehicle purchases new-energy vehicles, up from a 30 percent mandate.
There are other possible policy boosts for passenger EV sales. On-demand ride-hailing companies are growing quickly in China. Didi Kuaidi, China's largest, completed 1.43 billion rides in 2015.
At some point, Beijing will require those companies to use EVs, predicts Bill Russo, a managing partner at Gao Feng Advisory Co. in Shanghai.
"If you want a higher penetration and market share of electrification, you can require these on-demand companies to electrify their fleets," he says. "I can see a quick acceleration of electrification."
Regardless of demand, automakers in China will need to produce EVs to meet fleet fuel economy mandates, which call for 5 liters of fuel consumed per 100 kilometers driven, or 47 mpg, by 2020.
KY Chan, CEO of Protean Electric Inc., says that is one reason he found a lot of interest in China for his company's in-wheel electric-drive systems. Protean, which has offices in Troy, Mich., the U.K. and Shanghai, has investors including GSR and Jiangsu New Times Holding Group, located in eastern China.
"No matter what, even if they are losing money [producing EVs], the OEMs will have to produce a number of new-energy vehicles in order to lower the overall [fuel economy] below 5 liters," Chan says.
The central government's EV push has made China a fertile market for fundraising. "The amount of resources flowing into [the EV sector] is just unimaginable," he says. "In China, I went from a period of no interest to one of a lot of interest."
Chan figures Chinese investors have a stronger stomach for the cash burn rate of a startup like Protean. It has talked to U.S. companies about being acquired, but "we would become a burden to their balance sheet," he says.
Perhaps the highest-profile Chinese investment in U.S. electrification companies is Wanxiang's acquisitions of battery-maker A123 Systems and luxury plug-in hybrid manufacturer Fisker Automotive, renamed Karma Automotive.
Privately owned Wanxiang Group Corp., one of China's largest automotive suppliers, comes from a very traditional background; it got its start producing driveshafts and roller bearings.
Why did it acquire the two U.S. companies?
"China is committed to producing more and more electric vehicles," says Pin Ni, president of Wanxiang America Corp. "Wanxiang wants to participate in that growth, and we saw an opportunity to do so by acquiring A123 and Fisker."
If Wanxiang hadn't acquired Waltham, Mass.-based A123 in 2013, says CEO Jason Forcier, "the technology would have been sold off to the highest bidder."
Instead, Chinese ownership enabled A123 to double its capacity, and the company is generating positive cash flow, Forcier says.
A123 is focusing on low-voltage batteries and working with all the major European automakers on 48-volt systems. But China still accounts for a big chunk of the battery-maker's growth.
"That speaks to the focus of the Chinese government to incentivize these vehicles," says Forcier. "We haven't seen that in the U.S."
"A lot of trust'
Wanxiang acquired A123 customer Fisker, whose problems imperiled A123, in 2014, paying $149.2 million. Wanxiang beat out Hong Kong investor Richard Li, who also was bidding for the electric automaker. The now-Karma Automotive is trying to revive itself from a headquarters in Southern California.
Karma sees the most opportunity in China, which is the world's largest luxury car market. But it will sell cars in the U.S., as well, says Chief Marketing Officer Jim Taylor.
That kind of U.S. presence is important. Chinese consumers know their country's long history of shoddy and copied products. Plus, China's early EV efforts often focused on low price rather than high quality.
"You need to bring in technology that has been certified as non-Chinese," Gao Feng's Russo says.
Even in luxury-hungry China, Karma could be a tough sell. "Luxury [EVs] do not have strong potential, because rich people need the premium car's brand first," Automotive Foresight's Zhang says.
But Chinese investors don't mind taking "long bets" on their investments, Taylor says.
Wanxiang Chairman Lu Guanqiu "has put a lot of trust in our executive team," he says. "If we were American-owned, that rope would be a lot shorter."