Environmental and Economic Impacts of V2X Applications in Electric Vehicles: A Long-Term Perspective for China

Abstract

Electric vehicles (EVs) play a critical role in the transition to transportation electrification and are important for achieving carbon neutrality in this sector. China currently leads the world in EV ownership; however, the energy regulation potential of in-use batteries remains largely untapped in the context of an increasingly saturated EV stock. This study systematically evaluates the long-term benefits of vehicle-to-everything (V2X) applications based on EV sales projections and advancements in battery technology. The results indicate that, without compromising daily travel requirements, V2X applications could enable 109.50–422.37 TWh of annual electricity dispatch by 2030, achieving an estimated economic benefit of 198.92–767.25 billion CNY, and reducing carbon dioxide (CO₂) emissions by 45.01–173.60 Mt. By 2060, these figures are projected to increase significantly, with annual dispatchable electricity reaching 4217.39–21,689.43 TWh, generating an economic value of 10.82–55.66 trillion CNY, and reducing CO₂ emissions by 118.09–607.30 Mt. Furthermore, V2X applications could substantially contribute to achieving the emission reduction targets outlined in China’s Nationally Determined Contributions (NDCs). These findings highlight that V2X applications, as a transformative solution that promotes deep integration between the transportation and power sectors, enhance cross-sectoral emission reduction synergies and support the realization of carbon neutrality goals.

1. Introduction

In recent years, extreme weather events driven by climate change have increased significantly. Frequent natural disasters, such as high temperatures, droughts, floods, and hurricanes, have caused serious casualties and enormous economic losses worldwide. This trend not only exacerbates the vulnerability of ecosystems but also poses a serious challenge to the sustainable development of human society. In response to the growing climate crisis, the international community has established multilateral emission reduction cooperation mechanisms and promoted the continuous improvement of the global climate governance system. As a landmark international climate agreement, the Paris agreement has set a long-term goal of controlling the global average temperature rise within 1.5 °C above the pre-industrial level [1]. Through the introduction of the Nationally Determined Contributions (NDCs) mechanism, the agreement requires all parties to establish specific emission reduction targets and plans according to their national circumstances to promote the continuous reduction in global greenhouse gas (GHG) emissions [2].

However, despite the efforts made by countries at the policy level, the total global GHG emissions continue to rise. According to the data, global carbon dioxide (CO₂) emissions reached a record 41.6 gigatons in 2024, with the transportation sector accounting for about 21% of these emissions and is becoming one of the main sources of pollution [3]. The transportation sector is particularly dependent on the energy system based on fossil fuels, which makes it difficult to effectively curb carbon emissions. According to the analysis of the International Energy Agency (IEA), achieving deep decarbonization in the transportation sector requires sustained efforts in the large-scale deployment of electric vehicles (EVs), the optimization of transportation system structures, and the accelerated adoption of clean energy technologies. Therefore, transportation electrification is a key strategy for achieving carbon peaking and neutrality goals, promoting global energy transformation, and addressing climate change.

To address climate change and promote sustainable development, China has established ambitious targets for vehicle electrification, aiming to accelerate the low-carbon transformation of the transport sector. As the world’s leading market for EVs, China has made significant progress in the deployment and industrial development of new energy vehicles, with its installed battery capacity accounting for approximately 70% of the global total [4]. The rapid growth in EV adoption contributes to reducing emissions in the transportation sector and highlights the emerging role of EVs as decentralized energy storage assets within the power system [5]. In particular, the available capacity of EV batteries during idle periods creates favorable conditions for providing various energy services, thereby facilitating the broader deployment of vehicle-to-everything (V2X) applications and enabling new pathways for enhancing the value of battery assets.

V2X application encompasses various connection modes, mainly including vehicle-to-grid (V2G), vehicle-to-home (V2H), and vehicle-to-building (V2B), each facilitating bi-directional energy flow between EVs and various energy systems. These V2X technologies exhibit distinct functional advantages through their respective application modes, making them suitable for diverse energy scenarios. The characteristics and benefits of the main V2X applications are summarized as follows:

V2G is currently the most widely implemented application within the V2X framework. V2G services refer to using electric vehicle batteries as distributed energy resources (DERs) or grid energy storage. Due to the characteristics of electric vehicle power batteries, V2G primarily provides electric auxiliary services. Electric vehicles can provide four primary types of V2G services in energy markets due to their rapid response capability and substantial energy capacity: spinning reserve, peak shaving and valley filling, frequency regulation, and demand response. In V2G systems, the energy stored in electric vehicles is utilized to provide services to entities involved in grid management, such as power system operators, distribution companies, and grid administrators [5]. A typical system architecture includes electric vehicles, V2G-enabled parking facilities, bidirectional chargers, grid infrastructure, aggregators, and load management units. Aggregators play a critical role in coordinating the charging and discharging behavior of EV fleets. Aggregators manage the connection of EV fleets to the grid by optimizing their charging and discharging patterns. Additionally, they collect and analyze data from EVs participating in regulation services to determine available capacity and grid demand at the time of connection. This facilitates the exchange of information between the grid and V2G-enabled EVs, enabling controllable energy flow. Integrating EVs into grid dispatch through V2G can alleviate peak load pressures, reduce the need for costly infrastructure upgrades, and enhance operational efficiency and system stability. V2G also presents economic arbitrage opportunities for EV users by allowing them to purchase electricity during off-peak periods and sell it back during peak demand.

In V2B applications, fleets of electric vehicles are aggregated to meet the energy demands of commercial and industrial buildings or microgrids. Commercial and industrial consumers generally incur higher capacity charges than residential users. Furthermore, due to the complexity of the electrical equipment and significant load fluctuations in these settings, these consumers often do not benefit from preferential electricity pricing policies. Additionally, power fluctuations caused by variations in line load may result in additional electricity charges. The primary objective of V2B applications is to reduce peak load demand and lower substantial capacity-related electricity costs, which can account for more than half of total monthly electricity expenses. The V2B system usually includes electric vehicles, bidirectional chargers, and building energy management systems. This configuration reduces electricity operational costs for commercial and industrial building managers and benefits grid operators by lowering peak demand and improving the power factor. Furthermore, electric vehicles that participate in power dispatch services within V2B applications can serve as backup power sources. This contributes significantly to reducing carbon emissions, delaying infrastructure upgrades, and supporting building operators in managing energy. V2B applications facilitate localized peak shaving and valley filling, reducing the expenses for distribution network capacity expansion investments, while also optimizing charging costs [6].

In V2H applications, the system architecture is relatively simple compared to other operational modes and does not require complex grid management systems. Power dispatch services can be initiated as soon as an electric vehicle is connected to a residence for charging or discharging, reducing the management for coordination among vehicle fleets. V2H systems typically involve one or more electric vehicles and are designed to optimize energy consumption, reduce peak household electricity usage, and lower overall energy costs. V2H components are usually connected to home energy management systems. Some homes can also integrate them with rooftop photovoltaic power generation systems and small-scale battery energy storage devices. Furthermore, electric vehicles equipped with V2H technology can serve as emergency backup power sources. V2H contributes to optimizing household energy operation and minimizing energy expenses by lowering peak power demand and leveraging time-of-use electricity pricing policy [7]. Implementing a dedicated pricing policy for charging electric vehicles in the future would encourage drivers to charge their vehicles at night, when demand is low. This would reduce the waste of renewable energy generation. In the meantime, V2H systems will play a greater role in optimizing and deploying smart grids.

At present, V2X applications have been deployed in a number of large-scale pilot projects around the world, demonstrating significant potential in optimizing energy management and enhancing the integration and utilization of renewable energy sources [8,9,10,11,12,13,14,15,16].

Table 1. Overview of V2X pilot projects in recent years.

Year	Project Name	Scale	Specific Mode	Case Region	Project Impact
2011	Parker vehicle-to-grid (V2G)	15	Frequency response, distribution services	Denmark	The Parker Project confirmed the technical feasibility and economic potential of using mass-produced EVs from multiple brands to provide grid services, supporting large-scale V2G deployment while promoting carbon reduction and industry standardization.
2012	M-tech Labo vehicle-to-building (V2B)	5	Time shifting for energy users, emergency back-up	Japan	The M-tech Labo project demonstrated the practical potential of V2B for load management and renewable energy integration by deploying EVs and reused battery systems in a factory, achieving over 10% daily peak load reduction.
2012	Leaf to Home vehicle-to-home (V2H)	4000	Time shifting for energy users, Emergency back-up	Japan	The Leaf to Home project utilized Nissan Leaf’s large-capacity battery and bidirectional CHAdeMO chargers to deliver 3–6 kW for household peak shaving and backup power. Widely demonstrated across Japan, the system demonstrated significant value during electricity peak pricing periods.
2017	INVENT (V2G)	50	Frequency response, distribution services, time shifting for energy users	United States	The INVENT project validated the feasibility and application potential of V2G technology in real-world settings by deploying large-scale bidirectional charging systems within a campus fleet, supporting grid regulation and renewable energy integration.
2017	ACES (V2G)	50	Distribution services, time shifting for energy users	Denmark	The ACES project deployed 50 bidirectional chargers and EVs on Bornholm Island to validate the technical feasibility and market potential of large-scale V2G systems for grid support and demand response
2020	Electric Nation Vehicle to Grid (V2G)	100	Reserve, distribution services, time shifting for energy users	United Kingdom	Electric Nation validated V2G feasibility through 100 chargers and 2 million operation hours, demonstrating grid flexibility, up to 50% cost savings, and multi-supplier compatibility.
2022	SunnYparc(V2G)	250	Reserve, distribution services, time shifting for energy users	Switzerland	SunnyParc, Switzerland’s largest V2G microgrid pilot, integrates 50 bidirectional chargers, solar PV, and smart pricing, demonstrating V2G’s potential in easing grid stress, enhancing energy autonomy, and fostering new business models.
2023	DrossOne (V2G)	280	Frequency response	Italy	DrossOne deployed 280 bidirectional fast chargers and second-life batteries at Stellantis, Italy. Since 2023, it has tested 5–25 MW storage, proving centralized V2G’s feasibility for grid services.
2023	e-Park (V2G)	50	Frequency response	China	The Wuxi e-Park V2G pilot deployed 50 bidirectional chargers across multiple scenarios with a credit system, demonstrating the technical feasibility, commercial viability, and peak-shifting benefits of a large-scale V2G discharge system.

provides an overview of recent V2X pilot projects, summarizing their geographic distribution, scale of implementation, key models, and project impact. These projects demonstrate the current progress and potential pathways for the broader adoption of V2X technologies across different regions.

Relevant research has explored the application value of V2X systems. For instance, Yu et al. investigated the economic benefits of V2G application in commercial transport and emphasized their contribution to enhancing urban energy system flexibility [17]; Li et al. examined the cost–benefit relationships among EV users, power grids, and power plants in V2G systems, using four EV brands as case studies [18]; and Shirazi et al. conducted a comparative analysis of diesel and V2G-enabled electric school buses, highlighting both economic feasibility and the technical and policy challenges associated with large-scale deployment [19]. From a business model perspective, Goncearuc et al. proposed a framework for integrating V2G-based services into EV charging business models and demonstrated, through profitability analysis, its potential advantages over traditional unidirectional charging models [20]. In terms of building-level integration, Luo et al. evaluated the performance of an improved V2B model that integrates renewable energy sources with bidirectional EV energy flow to enhance the efficiency of integrated energy systems [21]. For residential scenarios, Niu et al. examined the role of V2H applications in increasing household energy autonomy and optimizing load management [22]. At the load-balancing level, Muniandi et al. developed an integrated V2L system and evaluated its potential to improve energy efficiency, reduce operational costs, and enhance grid flexibility [23].

Current research primarily focuses on the more established V2G applications; however, V2X, as a broader concept, encompasses all possible topologies and modes of energy interaction between EVs and various systems. Qin et al. projected that by 2040, the total daily dispatchable energy from electric vehicles could be comparable to China’s total daily electricity consumption, indicating their substantial potential in enhancing grid flexibility and supporting the energy system [4]. In addition, the National Development and Reform Commission of China, in its relevant policy documents, has proposed actively promoting pilot applications of interactive scenarios. By developing advanced energy infrastructures such as the Internet of Vehicles, the policy aims to facilitate the deep integration of EVs within the power grid, while identifying viable business models, thereby advancing the large-scale deployment of V2X applications through market-based mechanisms [24].

To compensate for the shortcomings of existing research, this study proposes a comprehensive analytical framework for evaluating the potential benefits of the main V2X applications. The main contributions of this study are as follows:

(1)

This study projects the future market scale of EVs in China and integrates trends in battery technology development to construct an analytical framework for evaluating the potential of V2X deployment. The framework provides valuable insights into the deep integration of the transportation sector and energy systems.

(2)

Based on the vision of EVs as distributed energy proposed in the IEA roadmap for carbon neutrality in China’s energy system, this study constructs a model of EV driving behavior and analyzes the long-term economic benefits of large-scale V2X deployment.

(3)

In addition, this study proposes a methodology to quantify the carbon emission reduction benefits of V2X applications and evaluates their contribution to achieving China’s NDC target under the carbon peaking scenario. The results highlight the strategic importance of V2X in supporting long-term climate policy goals.

The remainder of this paper is structured as follows: In Section 2, an analytical framework for evaluating the comprehensive benefits of V2X systems is established. Section 3 outlines the scenario design and data sources used in the study. Section 4 presents case studies of representative regions. Section 5 systematically analyzes the projected economic and environmental benefits of V2X applications. Section 6 explores key factors influencing large-scale V2X deployment, including regulatory frameworks, technical barriers, regional applicability, and sustainability impacts. Finally, Section 7 summarizes the main research findings and proposes directions for future research. The theoretical framework of this study is shown in Figure 1.

2. Materials and Methods

2.1. Overview

This study used data from the IEA to develop an EV growth model. A material flow analysis (MFA) was applied to systematically assess the future stock of EVs in China. Based on the Power Battery Development Roadmap issued by China’s Ministry of Industry and Information Technology (MIIT), a diversified scenario analysis framework was constructed around representative vehicle travel patterns [25]. The framework was designed to comprehensively evaluate the economic potential and environmental impacts of future V2X applications.

2.2. EV Sales Modeling Framework

This study employed a logistic model to forecast annual EV sales in China. The model assumes an S-shaped growth path where the sales growth rate gradually declines as the market approaches saturation [26]. This approach captures the initial rapid adoption phase, followed by slowing growth as market capacity limits are reached. This provides a realistic depiction of market dynamics over time. Meanwhile, compared with the Bass and Gompertz models, the logistic model does not require predefined innovation parameters or growth rate constraints, making it more suitable for analyzing the long-term development of China’s EV market. The logistic growth equation is mathematically represented as follows:

$$F(t)={\displaystyle \frac{K}{1+e^{-q(t-t_0)}}}$$

(1)

where F(t) represents EV sales at time t; t₀ denotes the initial time; q denotes the diffusion rate; and K describes the maximum potential of the market. Since the peak value of EV sales is an estimated projection, expert recommendations were consulted, and validation was conducted using modeling implemented in Python version 3.12. The model exhibited a satisfactory fit when the market potential parameter K was set to 40 million units.

2.3. Dynamic MFA Model

Material flow analysis is a well-established method for quantifying resource flows and assessing stocks. It has been widely used to analyze electric vehicle stocks and support transportation electrification. In this study, MFA was used to simulate the flow of power batteries in Chinese electric vehicles from use to disposal. The annual EV stock is derived from new vehicle sales and the existing in-use fleet. By modeling the material flow characteristics of EVs, this study provides a quantitative assessment of the future potential of V2X applications based on electric vehicles [27]. Building on this framework, this study applied a dynamic MFA method to project the annual stock of EVs in the future. To address the uncertainty in battery lifetime, this study employs a two-parameter Weibull distribution to forecast the end-of-life (EOL) state of power batteries and dynamically model EV stock [28]. The Weibull distribution is a widely used and effective method for assessing the lifespan of durable goods and is capable of accommodating complex real-world usage conditions. The shape parameter α determines the form of the probability density function and is usually set to 3.5 for battery products. The scale parameter β describes the product’s lifecycle, generally corresponding to the average lifespan of the EV battery. Based on the Battery Technology Roadmap released by the Ministry of Industry and Information Technology, this study assigns β in stages: 8 years for 2015–2020, 10 years for 2021–2025, 12 years for 2026–2030, and 15 years for the period after 2030 [29].

The total number of EV batteries reaching the EOL stage at time t, along with the distribution of battery lifetimes, can be derived from Equations (2) and (3):

$$W(t)=\sum _{n}F\left(t-n\right)\times \mathrm{P}(\mathrm{t},\mathrm{n})$$

(2)

$$P\left(t\right)=1-\mathit{exp}\left[-{\left(t/\beta \right)}^{\alpha }\right]$$

(3)

where n represents the EV battery lifetime; W(t) denotes the number of EV batteries reaching the EOL stage at time t; and P(t,n) indicates the percentage of EVs sold at time n, whose battery reaches the EOL stage at time t. The annual growth in the EV stock can be derived from Equations (4) and (5):

$$\mathrm{\Delta }stock\left(t\right)=F\left(t\right)-W\left(t\right)$$

(4)

$$I\left(t\right)=stock\left(t\right)\times V\left(t\right)$$

(5)

where Δstock(t) denotes the annual growth in the stock of EVs at time t; I(t) denotes the total number of batteries installed at time t; and V(t) denotes the battery capacity at time t. Given the linear relationship between battery capacity and vehicle range, this study projected future battery capacity trends based on the driving range targets specified in the technology roadmap [30].

The battery capacity represents the amount of energy that can be extracted from the battery, which is related to energy density and weight. According to existing research, there is a significant linear relationship between battery capacity and electric vehicle range. The “Roadmap for Energy Conservation and New Energy Vehicle Technology” predicts that the range of EVs will increase by approximately 100 km every five years, approaching 400 km by 2025 and 600 km by 2035. Actual range performance in the current market also aligns with this prediction; for instance, the best-selling Tesla Model Y in the Chinese market in 2024 boasts an actual range of approximately 420 km under comprehensive usage conditions.

Based on the driving range targets set forth in the roadmap, this study analyzes the average battery capacity of electric vehicles. The battery capacity is projected to increase gradually from 47 kWh in 2015 to 87 kWh in 2030, 117 kWh in 2040, and 157 kWh in 2050, ultimately reaching 207 kWh by 2060. Missing data from the intervening years were supplemented using linear interpolation, and detailed data are provided in Appendix A,

Table A1. Average capacity of batteries from 2020 to 2060 (kWh).

Year	Average Battery Capacity (Per Battery)
2015	47
2016	49
2017	51
2018	53
2019	55
2020	57
2021	59
2022	61
2023	63
2024	65
2025	67
2026	71
2027	75
2028	79
2029	83
2030	87
2031	91
2032	95
2033	99
2034	103
2035	107
2036	111
2037	115
2038	119
2039	123
2040	127
2041	131
2042	135
2043	139
2044	143
2045	147
2046	151
2047	155
2048	159
2049	163
2050	167
2051	171
2052	175
2053	179
2054	183
2055	187
2056	191
2057	195
2058	199
2059	203
2060	207

. Due to ongoing advancements in battery technology, the future energy efficiency of EV batteries was evaluated based on the roadmap’s energy consumption targets. Under standard operating conditions, battery efficiency is expected to reach 10.5 kWh/100 km by 2030. Based on current technological upgrade trends, efficiency is projected to improve to 9.5 kWh/100 km by 2040, 8.5 kWh/100 km by 2050, and 7.5 kWh/100 km by 2060. Figure 2 illustrates the survival curves of EV batteries under different lifetime assumptions.

2.4. Estimation of V2X Application Potential

According to the IEA’s World Energy Outlook report, China accounted for approximately two-thirds of global electricity demand growth, driven mainly by accelerating electrification in the building and transport sectors [31]. In this context, V2X application enables EV batteries to provide energy services, helping mitigate peak energy consumption in power grids and increasing the residual value of EV batteries during non-driving periods. In 2015, the State Grid Corporation of China introduced a framework to facilitate the integration of various distributed energy resources into 10 kV distribution networks, thereby laying the foundation for the widespread adoption of V2X applications [32]. A typical V2X system comprises EVs, bidirectional charging and discharging equipment, aggregators, and control systems. This study primarily focused on three main V2X application scenarios: V2G, V2B, and V2H.

In V2X applications, EVs serve as flexible resources participating in power system dispatch. On one hand, EVs can feed electricity back to the grid during peak demand periods and charge during off-peak times, thereby achieving peak shaving and valley filling to optimize the load curve. On the other hand, electric vehicles can effectively absorb the variable outputs from wind and solar power in V2G mode, particularly as the share of renewable energy generation continues to rise. This reduces renewable energy discarded and enhances the system’s ability to accommodate renewable generation. According to the Global Energy Interconnection Development and Cooperation Organization, China’s total installed wind and solar power capacity is expected to exceed 6.4 billion kilowatts by 2060, accounting for over 80% of the total installed power capacity [33]. The large-scale integration of variable renewable energy will pose greater challenges to grid stability at that time. Against the backdrop of rising EV ownership and increasing battery capacity per vehicle, deploying V2G projects in key regions is expected to significantly improve the grid’s ability to regulate and absorb renewable power.

For application scenarios such as V2B and V2H, according to data from the China Statistical Yearbook, commercial and residential electricity currently account for over 25% of China’s total electricity consumption [34]. As overall electricity demand continues to grow, it is expected that China’s total electricity consumption will reach approximately 1.7 trillion kilowatt hours by 2060, with an increase in electricity consumption in these scenarios. In this context, V2X technology enables electric vehicles to achieve energy self-sufficiency and load transfer in local scenarios. This alleviates pressure on the power grid, improves the efficiency of system resource allocation, and plays a key role in optimizing the operation of distributed energy systems. Figure 3 presents the annual electricity consumption in these two sectors, based on the China Statistical Yearbook data.

At present, the potential benefits of V2X applications have yet to be fully realized. The main limiting factors include the uncertainty of available energy during operation and the complexity and variability of driving behaviors. Therefore, this study theoretically evaluated the dispatchable energy capacity of future V2X systems based on an analysis of EV ownership. It incorporated key factors such as mainstream V2X application scenarios, daily driving patterns, battery capacity specifications, cycle life, and policy support. Furthermore, it also explored the potential value of V2X applications in the era of EV stock. The dispatchable energy from EVs is calculated using Equations (6) and (7):

$$e_{dis}(t)=\left[V(t)\times DOD-{\displaystyle \frac{VKT}{100}}\times EFF\right]\times {\eta }_{BG}$$

(6)

$$E_{dis}\left(t\right)=Stock\left(t\right)\times e_{dis}\left(t\right)\times T_{dis}\times \rho$$

(7)

where e_dis(t) denotes the amount of EV discharge electricity from EVs at time t; DOD denotes the rated depth of discharge; EFF denotes the battery energy efficiency, η_BG denotes the efficiency of the battery to the grid; E_dis(t) denotes the total volume of electricity that can be dispatched at time t; T_dis denotes the total time of electricity dispatch; and ρ denotes proportion of EVs participating in the V2X application. VKT denotes the annual vehicle kilometers traveled. The parameter consists of routine daily kilometers and additional backup kilometers for emergencies. In China, the daily driving demand for EVs typically follows a gamma distribution. Considering that the average daily travel distance for passenger vehicles remains relatively consistent between weekdays and holidays, this study adopts the representative value of 38.53 km for daily travel distance, as the relevant literature suggests [35]. Furthermore, an additional 20 km is allocated as contingency mileage to accommodate unexpected trips, such as hospital visits, transportation terminals, or other urgent destinations.

With continuous advancements in battery technology, both battery capacity and efficiency have significantly improved, driving rapid growth in power dispatch capabilities for V2X applications. Based on an analysis of typical daily travel distances of electric vehicles in China, this study evaluates the schedulable energy available for V2X participation. It is projected that by 2030, without compromising daily travel or reserve driving range, each electric vehicle will have a power dispatch capacity of 80.85 kWh per day based on one full charge–discharge cycle. This capacity is expected to increase to 121.44 kWh by 2040, further grow to 162.02 kWh by 2050, and reach 202.61 kWh by 2060, while still meeting daily travel needs. As power dispatch capabilities continue to improve, electric vehicles are expected to contribute significantly to emission reductions through V2X applications. Building upon the assessment of power dispatch potential, this study incorporates carbon emission factors associated with electricity generation to evaluate V2X’s emission reduction potential under future scenarios.

2.5. Estimation of V2X Economic Benefits

This subsection focuses on the economic benefits of EVs in V2X applications. To begin with, this study adopted the levelized cost of storage (LCOS) to evaluate the economic viability of V2X applications. LCOS quantifies the discounted cost per unit of discharged electricity for a specific energy storage technology and application, considering all relevant technical and economic parameters that influence the cost over the system’s discharge lifetime. It reflects the breakeven price required to recover all capital and operational expenditures over the system’s lifetime.

To accurately estimate LCOS in the context of V2X-enabled EVs, this study considers the total discounted costs over the entire battery lifecycle. These costs are categorized into four main components: capital investment cost, charging cost, battery degradation cost, and operation and maintenance (O&M) cost. Capital investment cost refers to the expenses associated with retrofitting or upgrading charging infrastructure to support V2X functionality. Charging cost refers to the additional electricity expenses incurred due to V2X participation. O&M cost encompasses the operational and maintenance expenditures required to sustain the V2X application, which are typically estimated at approximately 5% of the total system cost per year [36]. Battery degradation cost captures the value loss resulting from accelerated battery aging caused by frequent charge–discharge cycles.

It is important to note that the frequent charging and discharging cycles involved in V2X applications can lead to accelerated battery degradation and the need for premature replacement. The power battery is the core component of EVs and accounts for over 40% of total vehicle costs. The high cost of batteries makes degradation a key factor influencing the economic viability of V2X applications. Over the lifecycle of an EV battery, degradation can be categorized as cycle aging or calendar aging. Cycle aging refers to the deterioration that occurs during charge–discharge cycles and is generally proportional to the cumulative energy throughput. To better evaluate the long-term economic impact of EVs participating in V2X, this study models battery degradation primarily based on the cycle aging mechanism.

The rated cycle life of mainstream power batteries currently ranges from 500 to 3000 cycles. This study adopts a conservative estimate of 2000 cycles as the upper limit of battery life, a parameter widely used in existing V2X-related benefit assessments. In addition to cycle life, the cost of replacing the battery is also a critical factor affecting economic outcomes. When estimating this cost, it is important to consider future reductions in cost driven by economies of scale and improvements in manufacturing processes. According to the targets set forth in the Power Battery Technology Roadmap, the unit cost of batteries is expected to steadily decline, falling below 350 CNY/kWh by 2025 and dropping further to 320 CNY/kWh by 2030. By 2035, the cost could potentially fall below 300 CNY/kWh. Based on current technological advancement and cost reduction trends, the battery unit price is projected to reach approximately 220 CNY/kWh by 2060.

Meanwhile, in order to compare the economic benefits of different V2X applications, this study evaluates the impact of various retrofit and operational costs on economic performance across different application scenarios, based on power dispatch volume and using time-of-use electricity pricing as the analytical framework. The LCOS is calculated using the following formulas:

$$C_{in}=Z_{V2X}·{\displaystyle \frac{N_{V2X}}{N_{ch}}}$$

(8)

$$Z_{ba}=V\left(t\right)\times U\left(t\right)$$

(9)

$$C_{ba}=\sum _{t=1}^{L_{V2X}}{\displaystyle \frac{1}{{\left(1+r\right)}^t}}\times {\displaystyle \frac{e_{dis}}{L_c}}\times Z_{ba}$$

(10)

$$C_{ch}=\sum _{t=1}^{L_{V2X}}{\displaystyle \frac{1}{{\left(1+r\right)}^t}}\times {\displaystyle \frac{e_{dis}}{{\eta }_{GB}}}\times {PR}_{el}$$

(11)

$$C_{O\&M}=\sum _{t=1}^{L_{V2X}}{\displaystyle \frac{1}{(1+r{)}^t}}\times C_{in}\times {\eta }_{O\&M}$$

(12)

$$C_{total}=C_{in}+C_{ba}+C_{ch}{+C}_{O\&M}$$

(13)

$$LCOS={\displaystyle \frac{C_{total}}{{\sum }_{t=1}^T\frac{e_{dis}\times T_{dis}}{{\left(1+r\right)}^t}}}$$

(14)

where C_in denotes the capital investment cost; C_ba denotes the cost associated with battery degradation; C_ch denotes the charging cost related to V2X applications; C_O&M is the maintenance cost of V2X applications; C_total denotes the total cost associated with V2X applications; Z_V2X denotes the cost of retrofitting V2X applications; Z_ba denotes the battery cost; U(t) denotes the unit cost of battery; N_V2X denotes the lifetime of the battery in V2X applications; N_ch denotes the lifetime of charger pile; L_c indicates the number of charging cycles in battery; L_V2X is the number of cycles in V2X applications; r denotes the discount ratio; PR_el represents the price of battery charging during the valley period of electricity; η_GB is the efficiency of the grid to battery; and η_O&M represents the ratio of the annual maintenance cost to the capital investment cost.

This study adopted Net Present Value (NPV) as the main indicator of profitability to quantify the economic value generated by V2X applications in grid-level, residential, and commercial contexts. NPV is widely used in capital budgeting and investment planning to estimate the present value of future cash flows and to evaluate a project’s expected profitability. In this study, revenues from V2X applications were primarily derived from arbitrage opportunities created by electricity price differentials, which were typically governed by time-of-use (TOU) pricing schemes. The TOU electricity pricing structure in Jiangsu Province was selected as a representative case, given that the region is a national leader in both EV ownership and the deployment of V2X pilot programs [37]. A typical daily TOU electricity price curve for Jiangsu is shown in Figure 4.

The income generated from EV participation in grid regulation, along with the corresponding NPV, is calculated using Equations (15) and (16):

$$R={PR}_{re}\times E_{dis}$$

(15)

$$NPV=R-C_{total}$$

(16)

where R denotes the total revenue from grid regulation, and PR_re represents the retail electricity price during the peak period of electricity. NPV represents the cumulative discounted cash flows over the V2X applications.

2.6. Estimation of V2X Environmental Benefits

This section systematically evaluates EVs’ environmental benefits in V2X applications through power dispatch mechanisms. At the societal level, EVs operating under the V2X framework can be considered DERs. These DERs can discharge stored electricity from onboard batteries through intermediaries, such as aggregators and distribution system operators. These resources can provide ancillary regulation services for the power grid and building energy management systems. According to the electricity supply and demand analysis and forecast report issued by the China Electricity Council, China’s installed thermal power capacity currently reaches approximately 1.4 billion kilowatts, accounting for around 45% of the nation’s total installed capacity [38]. Thermal power thus remains a dominant element of China’s electricity mix. In this context, V2X’s flexible dispatch capability improves the overall efficiency of electricity utilization and significantly reduces GHG emissions from the power sector.

For the quantitative evaluation of environmental benefits, this study adopted the national average CO₂ emission factor for electricity generation to estimate the emission reduction potential of V2X applications. Considering the increasing penetration of renewable energy penetration and China’s strategic goals of achieving carbon peaking and carbon neutrality, the carbon intensity of electricity generation is expected to decrease over time. To accurately reflect long-term emission reduction trends, this study incorporated key parameters from the China Automotive Low-Carbon Action Plan released by the China Automotive Technology and Research Center [39]. The study used these documents to dynamically model the power generation emission factor based on carbon neutrality scenarios, enabling a comprehensive assessment of the long-term carbon mitigation potential of EVs participating in V2X applications.

Therefore, the carbon emission reduction benefits resulting from EV participation in V2X applications are quantified as shown in Equation (17):

$$G=E_{dis}\times CEF$$

(17)

where G denotes the emission reduction benefits from V2X applications, and CEF represents the emission factor from grid generation.

3. Scenario Design and Data Sources

3.1. Scenario Design

Given that V2X strategies are currently in the pilot implementation stage and their long-term application potential is uncertain, this study employed policy-driven scenario analysis to evaluate the potential impacts of V2X deployment. According to China’s 14th Five-Year Plan, national technical standards for V2X applications have already been established, and large-scale deployment is anticipated to begin around 2030 [40].

Based on the infrastructure development path proposed by the Chinese Society of Automotive Engineers in “Development Strategy for Charging Infrastructure” and relevant research on China’s willingness to participate in V2X interaction, this study establishes three V2X development scenarios: Business as Usual (BAU), Announced Policy Scenario (APS), and Deep Promotion Scenario (DPS) [41]. Key variables, such as the rate of infrastructure deployment and user participation rates, are incorporated into each scenario to comprehensively evaluate the potential overall benefits and application prospects of V2X technologies under different deployment pathways in China.

In addition, drawing on the findings of Khezi et al. regarding user willingness to participate in different V2X connection modes, this study defines the adoption rates of the three primary V2X application types [42]. Specifically, over 68% of respondents expressed a willingness to participate in V2G applications, and more than half indicated a readiness to pay for upgrades necessary to support V2H functions. Therefore, based on China’s current V2X regulatory policy and taking into account China’s future promotion of typical vehicle networking interactive application scenarios represented by V2G, specific application scenarios are allocated. The V2G, V2H, and V2B connection modes are allocated a proportion of 50%, 30%, and 15%, respectively. The remaining 5% may be used for other small-scale application scenarios, such as V2L and V2V. To explore the comprehensive benefits of long-term deployment in mainstream V2X application scenarios, this study mainly discusses three V2X application scenarios: V2G, V2B, and V2H. The definitions of the penetration scenarios are shown in

Table 2. Scenario descriptions for V2X penetration policies.

Penetration Scenarios	Infrastructure Deployment Rate	User Participation Ratio
Business as Usual (BAU)	No significant improvement in existing charging technologies or supporting infrastructure. The charging pile installation rate remains at approximately 35%.	Considering the current level of infrastructure development, user participation increases gradually from 20% in 2030 to 50% by 2060.
Announced Pledges Scenario (APS)	Charging technologies and supporting infrastructure improve steadily under policy support. Charging pile installation rate increases from around 44% in 2030 to 80% by 2060.	With policy incentives in place, the user participation rate rises from 30% in 2030 to 75% by 2060.
Deep promotion scenario (DPS)	Stronger policy efforts drive significant transformation in charging technologies and business models. Charging pile installation rate increases from 54% in 2030 to 90% by 2060.	Under strong policy incentives, user participation increases significantly from 45% in 2030 to full participation (100%) by 2060.

.

3.2. Parameters Summary

Table 3 summarizes the key assumptions adopted during the modeling phase of this study. These include battery cycle life, battery capacity, battery cost, retrofitting costs for V2X applications, daily driving distance, and the grid’s average carbon emission factor. A quantitative analysis was conducted based on these parameters to simulate the comprehensive benefits of V2X applications under real-world conditions.

Based on the driving range targets outlined in the Energy Saving and New Energy Vehicle Technology Roadmap, we modeled the battery capacity, energy efficiency, and manufacturing cost of EV batteries participating in V2X applications. The average battery capacity is projected to reach 87 kWh by 2030, with an energy consumption of 10.5 kWh per 100 km and a manufacturing cost of 320 CNY/kWh. With advancements in battery technology and reductions in manufacturing costs, the average battery capacity is expected to increase to 207 kWh by 2060, while energy consumption decreases to 7.5 kWh per 100 km and manufacturing costs drop to 220 CNY/kWh. This battery modeling provides the fundamental power service data for the subsequent analysis of V2X benefits. For V2X applications, a bidirectional charger power rating of 10 kW was assumed, consistent with current mainstream V2X projects. The average daily travel distance of EVs in China is 38.53 km. Additionally, to address travel needs in emergency situations, this study includes an additional 20 km as reserve driving range.

The limit of 2000 full charge–discharge cycles was adopted for a battery cycle life based on current degradation research. This parameter is widely used in existing studies on battery aging and performance decline [43]. Regarding power transmission loss between V2X applications and the power grid, reasonable settings were established using the China Statistical Yearbook and the other relevant literature. Additionally, infrastructure upgrade costs were differentiated by V2X application scenario based on the EV grid integration roadmap developed by the World Resources Institute. For the V2G scenario, the estimated cost to upgrade charging stations and distribution networks was set at 12,000 CNY. For V2H applications, including residential backup power systems and bidirectional chargers, the total retrofit cost was estimated at 32,000 CNY. In the V2B scenario, where energy storage systems are typically sized for four hours of full-load operation in commercial buildings, the total cost was estimated at 44,000 CNY.

In evaluating the operational performance of V2X applications, both economic and environmental benefits were considered key indicators. O&M costs were assumed to be 5% of the initial capital investment, consistent with proportions reported in the existing V2X literature. For the economic analysis, an 8% discount rate was applied to reflect current economic conditions in China. Environmental benefits were quantified using the most recent national average CO₂ emission factor from China’s official greenhouse gas emission inventory, to reflect the emissions reduction potential associated with V2X-enabled grid interaction. Based on these assumptions and parameters, this study conducted a systematic simulation to evaluate the impact on V2X benefits.

Table 3. Modeling parameter descriptions.

Parameter		Unit	Value	Resource
Electric vehicle	Energy efficiency	kWh·100 km−1	7.5–10.5	[30]
	Daily distance	km	38.53	[35]
	Emergency distance	km	20	[35]
Battery	Lifecycle	times	2000	[18]
	Capacity	kWh	47–207	[25]
	Cost	CNY·Wh−1	0.22–0.32	[30]
	Charge efficiency	%	90	[4]
	Discharge efficiency	%	93	[4]
V2X equipment	Retrofitting cost	CNY	12,000–44,000	[22]
	Maintenance cost	%	5	[18]
	Power capacity	kW	10	[4]
	Discount rate	%	8	[18]
Grid	Electricity emission factor	kgCO2·kWh−1	0.5366	[44]

Table 3. Modeling parameter descriptions.

Parameter		Unit	Value	Resource
Electric vehicle	Energy efficiency	kWh·100 km−1	7.5–10.5	[30]
	Daily distance	km	38.53	[35]
	Emergency distance	km	20	[35]
Battery	Lifecycle	times	2000	[18]
	Capacity	kWh	47–207	[25]
	Cost	CNY·Wh−1	0.22–0.32	[30]
	Charge efficiency	%	90	[4]
	Discharge efficiency	%	93	[4]
V2X equipment	Retrofitting cost	CNY	12,000–44,000	[22]
	Maintenance cost	%	5	[18]
	Power capacity	kW	10	[4]
	Discount rate	%	8	[18]
Grid	Electricity emission factor	kgCO2·kWh−1	0.5366	[44]

4. Case Study

In the context of carbon neutrality, the deep integration of transportation electrification and power systems is increasingly recognized as a critical pathway toward sustainable development. In China, the transportation sector is rapidly becoming electrified, and the number of EVs is growing. EV adoption exhibits a distinct spatial pattern: stronger development in the east and slower progress in the west.

This study selects four representative provinces as case study areas to systematically assess the regional deployment potential of V2X applications and their associated economic and environmental benefits. The case study areas include two eastern coastal provinces with well-established EV industries and rapid development trends (Jiangsu and Shandong), as well as two central and western provinces (Jiangxi and Shaanxi) that are developing more slowly but show considerable growth potential.

The analysis incorporates a range of critical factors, including the current EV ownership base, projected provincial EV ownership rates, electricity pricing and regulatory frameworks, and grid-specific carbon emission factors. Based on these parameters, a quantitative assessment is conducted to evaluate the economic returns and carbon reduction potential of V2X deployment under different regional conditions. The detailed parameters used for the case analysis are shown in Table 4.

Table 4. Key parameter description for case study.

Region	Jiangsu	Shandong	Jiangxi	Shaanxi	Resource
EV ownership (2030, million units)	4.10	5.50	1.83	1.90	[45]
EV ownership (2060, million units)	26.79	33.42	15.44	12.79
Time-of-use electricity price (CNY)	0.3404–1.2596	0.3342–1.0347	0.3641–1.0070	0.3637–0.9907	[46,47]
Grid emission factor (2030, kgCO2·kWh−1)	0.52	0.51	0.45	0.57	[48]
Grid emission factor (2060, kgCO2·kWh−1)	0.23	0.23	0.19	0.25

Table 4. Key parameter description for case study.

Region	Jiangsu	Shandong	Jiangxi	Shaanxi	Resource
EV ownership (2030, million units)	4.10	5.50	1.83	1.90	[45]
EV ownership (2060, million units)	26.79	33.42	15.44	12.79
Time-of-use electricity price (CNY)	0.3404–1.2596	0.3342–1.0347	0.3641–1.0070	0.3637–0.9907	[46,47]
Grid emission factor (2030, kgCO2·kWh−1)	0.52	0.51	0.45	0.57	[48]
Grid emission factor (2060, kgCO2·kWh−1)	0.23	0.23	0.19	0.25

5. Results

This study quantified the comprehensive potential of future V2X applications by modeling EV ownership and incorporating V2X penetration scenarios. First, we assessed the potential of electricity dispatch through V2X applications based on a dynamic material flow analysis of the future EV stock. Subsequently, the long-term economic and environmental benefits of V2X applications under future scenarios were evaluated. Furthermore, we examined the potential contribution of V2X applications to China’s carbon emission reduction targets.

5.1. Evaluation of Energy Dispatch Potential from V2X Applications

Figure 5 illustrates the projected growth trends in EV stock and the associated energy storage capacity. Under a deep transformation scenario in the transportation sector, EV sales in China are expected to increase substantially. As of 2024, the total EV stock has reached 13.13 million units, providing a realistic baseline for future projections. Based on a dynamic material flow analysis, the total EV stock is projected to reach 76.45 million units by 2030 and further expand to 463.57 million units by 2060. This growth trajectory aligns with the scenarios outlined in the roadmap, and the detailed data are provided in Appendix A,

Table A2. China’s electric vehicle stock for V2X applications (2030–2060).

Year	EV Stock (Million Units)
2030	76.45
2031	96.85
2032	120.03
2033	145.59
2034	172.26
2035	200.05
2036	228.40
2037	256.82
2038	284.92
2039	312.38
2040	338.91
2041	363.74
2042	386.63
2043	407.37
2044	425.68
2045	441.40
2046	454.37
2047	464.65
2048	472.41
2049	477.98
2050	481.60
2051	483.52
2052	484.07
2053	483.53
2054	482.10
2055	480.01
2056	477.39
2057	474.35
2058	470.99
2059	467.39
2060	463.57

.

Accompanying the growth in EV stock, the energy storage potential enabled by EVs is expected to increase substantially. By 2024, the total effective battery capacity of EVs is estimated to reach 0.85 TWh, serving as an early indication of their grid-interactive potential. Accounting for battery degradation and survival rates, the total effective battery capacity of EVs is projected to reach 6.65 TWh by 2030 and 95.96 TWh by 2060. These projections provide a theoretical basis for the large-scale deployment of V2X applications. Building on this, the study provided a systematic assessment of the potential power dispatch capacity enabled by V2X applications, based on travel behavior modeling across different penetration scenarios.

Assuming that EVs undergo one charge–discharge cycle per day, the annual dispatchable electricity enabled by V2X is estimated to range from 10.12 to 35.78 TWh in 2024, reflecting its dispatch potential at the initial deployment stage, and is projected to increase significantly to between 109.50 and 422.37 TWh by 2030. As EV ownership grows and V2X applications become more widely adopted, this figure is expected to rise significantly, reaching 4217.39 to 21,689.43 TWh by 2060. Under the APS, the dispatchable electricity from V2X could theoretically meet the national annual electricity demand by 2060, highlighting the significant potential of EVs as flexible energy assets within future power systems. Figure 6 illustrates the annual dispatch potential under the three V2X penetration scenarios.

5.2. Evaluation of Economic Benefits from V2X Applications

Based on projections from the EV Roadmap, we first assessed the economic feasibility of V2X applications using the LCOS metric. Figure 7 illustrates the LCOS trends of various V2X applications. Overall, the LCOS values for these applications exhibit a downward trend, primarily due to continuous advancements in battery technology and declining battery costs. Notably, by 2024, V2X applications already demonstrate a certain degree of economic viability, with LCOS values of 1.09 CNY/kWh for V2B, 1.01 CNY/kWh for V2H, and 0.88 CNY/kWh for V2G. By 2030, the LCOS values for V2B, V2H, and V2G are projected to reach 0.93 CNY/kWh, 0.87 CNY/kWh, and 0.77 CNY/kWh, respectively.

By 2060, these figures are expected to further decrease to 0.69 CNY/kWh, 0.68 CNY/kWh, and 0.64 CNY/kWh, respectively. It is worth noting that even in the absence of subsidy policies, V2X technologies continue to demonstrate a significant economic advantage over conventional stationary lithium-ion battery energy storage systems. Furthermore, V2X systems do not require additional land resources, enabling flexible deployment across a wide range of application scenarios and active participation in energy dispatch services. With continuous advancements in battery technology and improvements in vehicle safety, the failure rate of EVs is expected to drop below 0.1 incidents per 10,000 vehicles, thereby further outperforming conventional fixed energy storage systems in terms of cost-effectiveness and safety [30].

At the same time, electric vehicles offer greater flexibility and faster response times for performing peak shaving and valley filling tasks for the power grid than conventional pumped hydro storage and thermal energy storage systems. Although stationary energy storage systems also have rapid power output capabilities, operating them often requires additional considerations regarding system reliability, environmental adaptability, and fire safety. From an economic perspective, the total cost of pumped hydro storage ranges from 40 to 800 CNY per kWh, depending heavily on geographical water resources. And the initial investments typically reach several billion CNY. In contrast, V2X applications based on electric vehicles demonstrate clear advantages in terms of system flexibility and initial investment.

Figure 8 presents the NPV trends for the various V2X applications. Considering vehicle depreciation and other relevant factors, the annual economic returns of V2X applications in 2024 are already considerable, with V2G generating 4.65 thousand CNY per vehicle, while V2B and V2H yield 2.06 and 3.03 thousand CNY, respectively.

By 2030, participation in grid services through V2G is expected to generate approximately 8.21 thousand CNY in annual revenue per vehicle, with V2B and V2H applications yielding 5.62 thousand CNY and 6.60 thousand CNY per vehicle, respectively. These figures are expected to increase substantially by 2060, reaching 26.70 thousand CNY for V2G, 24.11 thousand CNY for V2B, and 25.08 thousand CNY for V2H.

From a societal perspective, V2X applications offer substantial economic benefits. Figure 9 illustrates the overall economic benefits under three V2X penetration scenarios.

Given the accelerating adoption of electric vehicles, V2X applications already demonstrate potential economic benefits ranging from 13.40 to 47.39 million CNY in 2024. The total economic benefits of V2X are estimated to range from 198.92 to 767.25 billion CNY by 2030. These figures are expected to increase significantly by 2060, reaching between 10.82 and 55.66 trillion CNY, thereby further validating the long-term economic potential of V2X and alleviating concerns regarding its profitability. Furthermore, advancements in battery technology and increased V2X penetration significantly enhance the associated economic returns. Specifically, under a high-penetration scenario in 2060, the economic benefits are projected to be approximately 4.1 times greater than those under a low-penetration scenario. These findings validate the substantial economic potential of V2X applications at both individual and societal levels. This result aligns with relevant research findings indicating that battery electric vehicles with larger battery capacities have greater potential for regulation in V2X service regulation. This contributes to increased system flexibility and improved economic benefits. Additionally, analyses by the Natural Resources Defense Council (NRDC) and the World Resources Institute (WRI) indicate that V2X applications provide valuable support to the power system and offer considerable economic returns for EV users. This further reinforces their potential role in future energy systems [49,50].

5.3. Evaluation of Environmental Benefits from V2X Applications

Figure 10 summarizes the potential carbon emission reductions from V2X applications under different penetration scenarios between 2030 and 2060. In the context of a steadily growing EV ownership, this study dynamically evaluates the GHG emissions avoided in the power generation sector through V2X participation in grid dispatch services. The results indicate that, assuming one complete charge–discharge cycle per day, V2X applications could reduce approximately 5.43 to 19.20 million tons of CO₂ emissions in 2024 and further reduce approximately 45.01 to 173.60 million tons of CO₂ emissions by 2030. This result is consistent with the estimated growth trend of carbon emission reduction benefits for V2X applications in related studies, which highlights the significant potential of V2X in decarbonization. Notably, the IEA confirmed the role of V2X in supporting sustainable development goals in the Global EV Outlook 2020 report, highlighting its contributions to flexible scheduling and renewable energy integration, as well as its potential environmental synergies [51].

Under the APS, the annual carbon reduction potential of V2X applications is projected to reach 404.87 Mt by 2060. As EV ownership expands, the carbon reduction benefits of V2X applications are expected to increase significantly. Concurrently, with the growing share of renewable energy in the future power mix, the grid emission factor is projected to decline continuously.

Although there is a persistent downward trend, the carbon reduction potential under the medium penetration V2X scenario in 2060 is approximately 4.8 times greater than that under the 2030 scenario. This finding indicates that increased EV ownership could substantially improve the carbon mitigation benefits of V2X applications. Furthermore, the extent of V2X penetration plays a significant role in overall carbon mitigation. Under the high penetration scenario, the annual carbon reduction surpasses that of the medium-penetration scenario by approximately 202.43 Mt of CO₂ in 2060. This further confirms the critical role of the deployment rate in achieving carbon reduction benefits. This trend aligns with the findings of related studies indicating that, as the proportion of EVs participating in V2X increases, overall power system carbon emissions show a continuous downward trend.

Building on the above analysis of carbon reduction benefits, this study quantitatively assesses the potential contribution of V2X applications to China’s NDC targets. In particular, it evaluates the extent to which V2X can support achieving the 2030 carbon reduction goal in the transportation sector under various development scenarios. The results indicate substantial variation in contribution rates across scenarios. The target values are based on research published by the Chinese Research Academy of Environmental Sciences [52]. Detailed figures are provided in

Table 5. Emission reduction benefits and contribution rates under different scenarios.

Year	Scenario	Carbon Reduction (Mt CO2)	Contribution Rate (%)
2030	BAU	45.01	11.54
2030	APS	84.87	21.77
2030	DPS	173.60	44.53
2060	BAU	118.09	6.06
2060	APS	404.87	20.77
2060	DPS	607.30	31.15

.

5.4. Results of Case Study

As transportation electrification continues to advance, the four selected regions have shown a consistent increase in EV ownership. Figure 11a shows that the number of EVs is expected to reach 4.10 million in Jiangsu, 5.50 million in Shandong, 1.83 million in Jiangxi, and 1.90 million in Shaanxi by 2030. Coastal provinces, such as Jiangsu and Shandong, have significant growth advantages due to their high levels of economic development, urbanization, and consumer purchasing power. By 2060, EV ownership in Jiangsu is projected to reach 26.79 million, while in Shandong, it is expected to reach 33.42 million. Meanwhile, Jiangxi and Shaanxi are expected to reach 15.44 and 12.79 million EVs, respectively, further highlighting regional disparities.

As the number of EVs continues to increase, the capacity for EVs to participate in V2X-based power dispatch also improves significantly. Figure 11b illustrates the projected V2X dispatch potential across the four provinces. In Jiangsu, the annual dispatchable energy is expected to increase from 11.07 TWh in 2030 to 835.77 TWh in 2060. Driven by rapid EV growth, Shandong’s dispatchable energy is expected to increase from 14.87 TWh to 1042.54 TWh during the same period, indicating substantial system regulation potential. Although Jiangxi and Shaanxi currently lag behind in EV deployment, their V2X dispatch capacities are also expected to grow significantly. In Jiangxi, the dispatchable energy is projected to grow from 4.94 TWh in 2030 to 481.51 TWh in 2060. In Shaanxi, it is expected to increase from 5.12 TWh to 399.09 TWh. Despite their relatively limited V2X resources, western regions have rich renewable energy potential, enabling greater flexibility in integrating clean energy sources. In this context, V2X applications could play a valuable role in stabilizing the power system and mitigating grid fluctuations.

From both economic and environmental perspectives, deploying V2X technology offers significant benefits. As Figure 11c shows, by 2060, the annual economic returns from V2X deployment in Shandong and Jiangsu are projected to reach 1721.95 billion CNY and 2157.59 billion CNY, respectively. Even in Shaanxi Province, where the electric vehicle industry has developed at a relatively slower pace, V2X applications could generate approximately 509.83 billion CNY in economic returns. These regional differences are primarily influenced by the maturity of the electricity market mechanism. Coastal areas have a higher degree of electricity marketization, providing users with stronger price signals and economic incentives, thereby increasing their willingness and enthusiasm to participate in V2X. Figure 11d shows that V2X effectively reduces carbon emissions from the power grid by shifting electricity loads and reducing dependence on high-carbon power sources during peak periods. The four regions are expected to reduce carbon dioxide emissions by approximately 2.20 to 7.64 million tons through V2X applications by 2030. The emission reduction effect becomes more significant by 2060, with Shandong Province showing the highest annual mitigation potential at 239.78 million tons. This is mainly due to the province’s high proportion of thermal power. In the context of a large-scale V2X application, its role in improving power grid efficiency and promoting a low-carbon transformation becomes more apparent.

5.5. Sensitivity Analysis

Based on projections of EV development trends and the modeling of daily travel behavior, this study evaluated the comprehensive application potential of V2X applications across various future scenarios. However, some key parameters in the model are subject to uncertainty, which may affect the robustness of the evaluation outcomes.

To systematically assess the influence of key parameters on the overall benefits of V2X, a sensitivity analysis was conducted using the control variable method under the APS. Sensitivity analysis is a widely adopted approach in model development and evaluation that is used to determine how variations in input parameters affect model outcomes. In this study, six critical factors were selected as influencing variables: EV ownership; average daily travel distance; battery capacity; battery cycle life; battery cost; and O&M cost. Each parameter was adjusted individually by ±10%, ±20%, and ±30%, while all other input parameters remained at their baseline values (as used in the benefit evaluation). This approach allows for an isolated assessment of each factor’s impact on the estimated V2X benefits. Figure 12 presents the sensitivity analysis results of economic benefits with respect to the selected parameters.

The sensitivity analysis reveals that battery capacity is the most influential factor affecting the economic benefits of V2X, followed by EV ownership and battery cycle life. The economic benefits are most sensitive to an increase in battery capacity, rising by 17.29% when battery capacity increases by 10%. Similarly, a 10% increase in EV ownership results in a 14.29% improvement in economic returns, while a 10% enhancement in battery cycle life leads to a 12.02% increase in economic benefits. Moreover, variations in battery costs significantly impact economic benefits, with a 10% increase in battery cost causing an approximately 1.92% decrease in overall economic returns. This highlights the critical role of battery cost reduction in enhancing the economic viability of V2X systems. In contrast, O&M costs and commuting distances constitute a relatively small proportion of the total cost structure, and thus, changes in these parameters have a limited effect on economic benefits.

Battery capacity is the most critical parameter in the sensitivity analysis of energy and carbon reduction benefits. Specifically, the annual energy dispatch potential increases by 10%, and carbon reduction benefits rise by 43.78 Mt when battery capacity increases by 10%. This further highlights the critical role of battery capacity in enhancing the overall benefits of V2X application.

6. Discussions

6.1. Policy Recommendations and Regulatory Pathways for Large-Scale V2X Deployment

Based on the rapid growth of electric vehicles in China, this study provides a comprehensive framework to analyze the long-term benefits of future V2X application deployment. However, it is important to emphasize that effective regulatory policies and sound market mechanisms are critical for the large-scale promotion of V2X.

First, the construction of a standardized system should be promoted from the system level. The insufficient interconnectivity of current devices and the lack of unified communication protocols have become significant obstacles to nationwide implementation. A top-level design of the V2X technology standard system should be carried out at the national level to clarify interface specifications, data management, and security requirements and reduce technical deployment barriers. Additionally, regulatory authorities should lead or coordinate the promotion of the compatibility and integration of domestic and foreign standards. They should also promote the formation of unified interface specifications between equipment manufacturers and operators. Furthermore, they should lower market entry barriers and promote the coordinated development of the industrial chain.

As the energy core carrier in V2X systems, electric vehicle power batteries urgently need to improve their energy efficiency standards to enhance service capabilities and system reliability. Relevant government departments should strengthen communication with research institutions, introduce policy incentives for new battery technologies, and continuously improve battery capacity and endurance while ensuring safety and controllability in order to meet diverse V2X application needs.

Then, institutional innovations should be implemented in the electricity market mechanism to provide stable market incentives for V2X. Future policies should accelerate the development of capacity markets and ancillary service compensation mechanisms, promote dynamic electricity pricing pilots in more regions, strengthen revenue expectations for users and operators in peak shaving and frequency regulation services, and improve electricity market liberalization levels. These policies will promote the commercial development of V2X.

In addition, regulatory policies need to balance regional coordination and user participation operability. As the proportion of renewable energy continues to increase, promoting the participation of electric vehicles in V2X applications and the coordinated development of microgrids and source–grid–load–storage integration will help the energy system achieve a deep transformation toward decarbonization, enhancing its resilience and sustainability. Especially in the central and western regions, although the power grid infrastructure and market mechanisms are relatively backward, they have abundant renewable energy resources, such as hydropower resources in the central region and wind and solar resources in the western region. Therefore, differentiated promotion policies should be formulated according to local conditions to guide resource allocation and infrastructure investment and promote regional balanced development. At the same time, subsidies and battery protection plans should be designed for end users to raise public awareness of and acceptance for V2X applications and to gradually increase participation.

6.2. Exploration of Multidimensional Factors Restricting the Large-Scale Application of V2X

Although V2X technology has entered the pilot promotion stage globally and shows great potential for development, large-scale deployment in China faces practical obstacles related to policies, markets, technology, and user behavior. The specific manifestations are as follows:

From a policy perspective, China has yet to establish a comprehensive regulatory framework that spans the full lifecycle of V2X deployment. There is a lack of unified technical standards, interface specifications, and communication protocols, which has led to operability challenges among equipment from different manufacturers. Furthermore, the role of electric vehicles in power markets remains undefined. The absence of standardized capacity markets and ancillary service compensation mechanisms hinders the provision of stable and long-term support for V2X systems. At the same time, cross-departmental communication and coordination mechanisms have yet to be established. There are certain barriers to the division of responsibilities and information sharing among the relevant departments of energy, electricity, transportation, and information. These barriers hinder policy implementation and overall industry development.

From a market perspective, V2X currently relies mainly on policy guidance. Market participants are not active enough, and there is a lack of stable commercial driving mechanisms. Aggregation service providers are important intermediaries that connect electric vehicle users and power grids. However, they have not yet been clearly positioned at the institutional level, which hinders the effective integration of decentralized resources. At the same time, China’s electricity market trading system is still developing. The current marketization level of the electricity price mechanism needs to be improved, and it cannot fully reflect the marginal value of services such as peak load regulation and frequency regulation, which reduces the profit expectations of users and operators and restricts the sustainability of the business model.

Additionally, key technologies and infrastructure remain incomplete. V2X systems rely on bidirectional charging piles, on-board inverters, and aggregation control platforms that have not yet been deployed on a large scale. High equipment costs and standard differences limit the interconnection and deployment efficiency of terminal systems. Additionally, there are significant differences in the development levels of the electric vehicle industry and distribution networks in different regions. Specifically, industries in economically developed regions are growing quickly and have a high number of electric vehicles. However, some central and western regions have low grid regulation capabilities and electricity marketization levels. This makes it difficult to support access to and scheduling of large-scale distributed energy storage resources. These issues increase the technical risks and uncertainty of system operation and pose regional coordination risks at the overall level.

It is worth noting that user behavior and acceptance are important constraints on the development of V2X applications. The operation of a V2X system relies on the active participation of electric vehicle users. However, users currently have a limited understanding of the electricity pricing mechanism. The initial investment and renovation costs of V2X facilities are relatively high. Additionally, concerns exist about battery degradation caused by frequent charging and discharging. Without clear economic incentives and battery protection mechanisms, user participation is generally low, making it difficult to establish a foundation for large-scale responses. Additionally, differences in the popularity, technological acceptance, and information acquisition capabilities of electric vehicles in different regions further exacerbate the imbalance in V2X promotion. Future policy formulation should focus on improving the standard system, designing market incentive mechanisms, and guiding user participation to gradually build a diverse, collaborative, and efficient V2X development ecosystem.

6.3. Cross-Regional Applicability of the V2X Assessment Framework

This study primarily focuses on China’s energy system and electric vehicle development pathways. However, the proposed V2X benefit assessment framework and modeling approach are scalable and can provide valuable references for related research in other countries and regions. However, due to differences in infrastructure, energy structure, policy mechanisms, and user behavior among countries, the applicability of the findings under different contexts is subject to certain limitations.

From an infrastructure perspective, developed countries such as France, Germany, and the Nordic region exhibit higher levels of power system digitalization and have preliminarily established the conditions for large-scale deployment of V2X technologies, including smart charging stations, bidirectional metering systems, and vehicle-to-grid coordination platforms. Notably, under the leadership of unified grid operators promoting standardized platform construction and the high compatibility of terminal devices, France has taken the lead in commercializing V2G deployment. In contrast, some developing countries still face infrastructure bottlenecks such as insufficient grid capacity and unstable power access, limiting the feasibility of V2X deployment in the short term.

Secondly, differences in policy and market mechanisms significantly impact V2X applications. For instance, some states in the U.S. have implemented capacity pricing, demand response incentives, and distributed storage compensation mechanisms. These policies provide tangible economic incentives for users to participate in V2X applications. Meanwhile, China remains in the exploratory phase of electricity price reform and user participation rule formulation, with an underdeveloped price incentive system that restricts user engagement.

Furthermore, disparities in energy structure and grid carbon emission factors significantly affect the environmental benefits of V2X technology. In countries with a high proportion of renewable energy, such as Denmark and Sweden, V2X technology can effectively increase renewable energy integration. However, in regions with a high proportion of coal-fired power plants, more detailed environmental benefit assessments are necessary when considering the local grid structure.

At the same time, user behavior and acceptance show regional differences. In many developed countries, public environmental awareness is relatively high, and people are more willing to engage with emerging energy systems, such as V2X and interactive energy management models. In China, however, users are generally more cautious about battery lifespan and retrofit costs, and the response potential has yet to be realized. Future efforts should focus on strengthening technology dissemination and establishing clear incentive mechanisms to enhance user participation progressively.

Although the parameter settings and policy context of this study are based on Chinese urban scenarios, the core analytical framework is highly adaptable and can be adjusted according to the specific circumstances of other countries and regions. Future research integrating multinational data and empirical analyses can design more regionally targeted V2X promotion pathways, facilitating the technology’s global adoption.

6.4. V2X Environmental and Social Impact Assessment

Although V2X technology has shown great potential in optimizing energy system operation and enhancing grid flexibility, it may also bring a series of potential impacts on the environment and society, which deserves further attention.

Firstly, frequent bidirectional charging and discharging operations may accelerate battery performance degradation, thereby shortening its lifespan. Battery degradation mainly includes two mechanisms: calendar degradation and cycle degradation. Calendar degradation is greatly affected by temperature and state of charge, while cycle degradation is closely related to charge and discharge frequency, rate, and depth. Implementing a reasonable operating strategy can delay degradation and improve system stability before the battery enters a critical degradation state. Meanwhile, relevant studies have shown that if V2X applications are not managed effectively, they may accelerate battery aging, thereby increasing the environmental burden and resource consumption of the entire vehicle lifecycle. China’s current power battery recycling system is still in its early stages, consisting of manufacturers, 4S stores, and third-party recycling institutions. Currently, there are practical problems such as non-standard recycling channels, high processing technology costs, low utilization of recycled materials, and inadequate recycling regulations. In the context of the continuous expansion of the retired battery industry, V2X could exacerbate the loss of resources and environmental risks associated with the recycling process. Currently, the European Union is leading the way in establishing a regulatory system for battery recycling, given that Europe is the primary export market for Chinese electric vehicles. Therefore, establishing an efficient, traceable, closed-loop recycling mechanism is essential for the sustainable development of the electric vehicle industry.

In addition, there are regional disparities in the initial deployment of V2X infrastructure, which may further exacerbate the distribution differences in energy services. Due to the high cost of upgrading V2X equipment, the current pilot deployment is concentrated in economically developed eastern areas and specific commercial vehicle fleets. However, there may still be differences in financial subsidy mechanisms and user awareness in central, western, and remote areas. At the same time, V2X requires greater access to the distribution network, particularly in areas with low transformer capacity, where local overloads can easily occur. Conversely, in areas with sufficient power grid capacity but limited dispatch power, V2X deployment may be less enthusiastic, leading to resource misallocation.

Therefore, future policy design should balance social equity and regional coordination, enhance the accessibility and acceptance of V2X by various users through differentiated incentive mechanisms, financial support, and public service coverage, and gradually achieve widespread participation and benefit sharing.

7. Conclusions and Outlook

This study employed a stock-driven model to dynamically analyze the evolution of EV ownership during the transition towards carbon neutrality. It further establishes a comprehensive framework for assessing the energy, economic, and environmental impacts of V2X applications. The findings indicate that as the EV stock continues to grow, the benefits of V2X applications will become increasingly prominent in the context of transportation electrification.

7.1. Conclusions

As transportation electrification and battery technology continue to advance, the widespread adoption of V2X technology will enable EVs to play critical roles in energy management and mobility services. Currently, V2X applications are being rapidly deployed around the world. Leading international organizations, including the IEA, the NRDC, and the WRI, have indicated that large-scale V2X deployment could generate significant economic returns. Furthermore, EVs demonstrate substantial potential to mitigate carbon emissions through V2X applications as distributed energy resources.

The results of this study reveal that under deep transportation electrification transformation, China’s EV market is expected to grow robustly, with vehicle ownership projected to reach 463.57 million units by 2060. Benefiting from continuous improvements in battery technology, the potential for EVs to participate in power grid dispatch via V2X is expected to increase substantially, with annual dispatch potential estimated to range between 4217.39 and 21,689.43 TWh by 2060. Furthermore, V2X applications could provide significant economic benefits to EV owners, with annual returns per EV projected to reach 26.70 thousand CNY by 2060. Compared with other emerging energy storage systems, V2X applications offer higher spatial efficiency because they do not require additional land use. In contrast to traditional storage systems, V2X has a clear advantage in terms of initial investment. As charging infrastructure improves, electric vehicles will be able to provide flexible, real-time energy services across various V2X application scenarios.

From a societal perspective, the total economic benefits of V2X could reach 55.66 trillion CNY by 2060, highlighting the importance of deploying this technology in future scenarios. Consistent with IEA projections, widespread V2X adoption is expected to significantly reduce transportation sector carbon emissions, achieving a maximum reduction of 607.30 million tons of CO₂ by 2060.This would strongly support China’s transportation sector carbon reduction targets. At the same time, V2X applications play a critical role in facilitating the integration of renewable energy into the grid, enhancing grid reliability, and optimizing the balance between power supply and demand. As renewable energy generation increases, V2X is anticipated to drive deeper integration between the energy system and the transportation sector, demonstrating even stronger growth potential.

Due to differences in the spatial layout of electric vehicle development among regions, the potential benefits of V2X applications may be significantly affected by the promotional process and basic conditions in different regions. Based on electric vehicle ownership levels, regulatory policies, and regional energy structures, this study examined typical regions to explore the future potential for V2X applications. The results suggest that economically developed coastal provinces have superior infrastructure and policy support. These regions have significantly higher potential for V2X applications than the central and western regions. In the short term, geographical constraints and varying levels of economic development in these regions may hinder the promotion of V2X applications. It should be noted that western China has abundant renewable energy resources, accounting for over 70% of the national total. This provides ample opportunity for integrating and developing V2X technology and renewable energy in future scenarios. Therefore, strategies for promoting V2X technology should be based on regional development characteristics. The government sector should optimize resource allocation, reasonably guide infrastructure investment, and promote the coordinated, orderly development of V2X applications nationwide.

In summary, this study systematically validated the significant economic and environmental potential of V2X applications through model analysis. The results are highly consistent with those of multiple empirical studies and analyses by authoritative international institutions. Promoting V2X technology on a large scale can achieve significant economic and environmental benefits and play a key, irreplaceable role in promoting energy system transformation and helping the transportation industry achieve its carbon neutrality goals.

7.2. Outlook

This study has several limitations that should be addressed in future research. Firstly, the analysis focused on passenger vehicles with relatively high market shares. To enable a more comprehensive and systematic evaluation of the overall benefits, future work should expand to include other vehicle categories, particularly diesel-powered commercial vehicles with higher pollutant emissions. Future research should investigate user acceptance and behavioral willingness to adopt V2X applications, which are essential for enhancing the accuracy and applicability of behavioral parameters within system models. Additionally, economic assessments of V2X systems under future scenarios must consider the impact of policy instruments. For example, mechanisms such as carbon taxation and clean energy investment subsidies could substantially influence cost recovery and return on investment and thus should be integrated into quantitative evaluations.