This is a battery insulation cup of the EL-370 electronic movement.

The cup has an opening at the bottom to expose anode (-ve end) and open top to expose the cathode (+ve end) of the battery, so there are only 2 possible places where the battery can touch: the negative terminal and the conducting spring on the battery cap.

Without the insulation cup, the battery will wobble in the battery compartment of this movement within a case where the anode of the battery may touch the other parts of the base-plate causing a short.

Once a battery is shorted it very quickly runs out of juice if not also frying some parts of the watch in the process.

If the isolation cup is missing, it isn't too hard to make, obviously.

Wrapping scotch tape around the battery's side and bottom, and trip the excess.

Or buy a donor movement that comes with a geniune insulation cup.