From King of Separators to Sulfide “Materials Supplier”: Enjie’s Bold Bet on the Golden Decade Window for All-Solid-State Batteries

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From Separator King to Sulfide “Materials Supplier”: Enjie’s High-Stakes Bet on the Golden Decade Window for All-Solid-State Batteries

When a disruptive technology signals an “overhaul” of your core business, the only thing you can do is acquire the companies building the tools for this change before the transformation arrives.
The lithium battery separator industry is experiencing a seismic shift.
Recently, Enjie, the global leader in battery separators, announced its plan to acquire Zhongke Hualian, a wet-process separator equipment manufacturer. Intriguingly, the target company ran at a loss last year. Meanwhile, Enjie itself is facing tough times, with a net loss of 556 million yuan in 2024 and continued losses in 2025.
A loss-making industry leader acquiring another loss-making upstream equipment supplier—does this sound like a mathematical game of “two negatives make a positive”, or a desperate act of “mutual support amid adversity”?
The story is far more complex and thrilling. Once an “invisible champion” that raked in 4 billion yuan annually from its lithium battery separator business and held a staggering 30% of the global market share, Enjie is now confronting two major challenges simultaneously: a brutal industry price war raging in the present, and a disruptive threat from the future technological roadmap—solid-state batteries.
This self-rescue effort by a leading enterprise with a market capitalization of over 100 billion yuan is not only a matter of life and death for the company itself, but also bears on China’s initiative in the entire lithium battery industrial chain. Every step it takes is a high-stakes gamble.

From Peak to Abyss: The “Avalanche” in Separator Prices

To understand Enjie’s predicament, we must first recognize how glorious it once was.
A lithium battery is like a sandwich: the cathode and anode are the two slices of bread, the electrolyte in between is the cream, and the separator is the insulating paper that prevents direct contact between the cathode and anode, which would otherwise cause a short circuit. This tiny membrane boasts extremely high technical barriers—its pore size, thickness, and strength directly determine the battery’s safety and lifespan.
Enjie reigned supreme globally in this “paper” segment. Its client list reads like a “who’s who” of the lithium battery industry: CATL, BYD, EVE Energy, CALB, and more.
Virtually all top-tier battery manufacturers count Enjie as their supplier. At the industry’s peak in 2022, the company recorded a revenue of 12.59 billion yuan, a net profit exceeding 4 billion yuan, and a gross profit margin that once neared 50%—making it a veritable cash cow.
However, super-profits attracted hordes of competitors. Driven by the boom in the new energy sector in recent years, capital from all walks of life flooded into the separator market, leading to a drastic expansion of production capacity. When supply growth far outpaced downstream demand, a ruthless price war ensued.
Data lays bare this “avalanche”: the price of mainstream 9μm wet-process base membranes plummeted from several yuan per square meter at the peak to around 0.8 yuan per square meter in the second half of 2025, edging perilously close to the industry’s cost line.
The consequences of this price collapse are directly reflected in Enjie’s financial statements:
  • Stagnant Revenue: Growth turned negative in 2023, as the growth engine sputtered to a halt.
  • Collapsing Profits: A net loss of 556 million yuan in 2024, followed by a further loss of 86 million yuan in the first three quarters of 2025.
  • Gross Margin Halved—Then Halved Again: Plunging from the lofty heights of nearly 50% to a mere 11.07% in 2024.
Once the “profit king”, Enjie has fallen into a quagmire of stagnant revenue growth, shrinking profits, and even losses. The industry has transformed from a technology-driven blue ocean into a cutthroat red ocean dominated by cost competition.

Integrating the Industrial Chain: A Gamble on “Cost Reduction for Survival”

Faced with industry-wide losses, Enjie’s first move is vertical integration—acquiring upstream equipment supplier Zhongke Hualian.
The logic behind this move is clear: since it has no control over the prices of its downstream products (separators), it will seek profits upstream by seizing control of the lifeline of production equipment.
What is Zhongke Hualian’s background?
It is one of the few domestic companies capable of independently developing complete wet-process separator production lines, with over a decade of technical accumulation. Acquiring it means Enjie is expected to build an integrated chain covering equipment R&D and separator manufacturing.
The potential benefits of this seemingly “money-losing deal” include:
  1. Lower Equipment Investment Costs: Eliminating the need to purchase core equipment at high prices from external suppliers and instead producing equipment in-house can reduce fixed asset investment.
  2. Optimized Production Processes: Tighter integration between equipment and processes allows for targeted improvements to production lines, boosting efficiency and product yield.
  3. Building a Deeper Moat: Mastering core equipment technology in-house creates a complete technical barrier from equipment to products, making it harder for latecomers to catch up.
Enjie’s management has high hopes that this integration will effectively lower operational costs and drive profitability back on track. In essence, this is a battle for survival—one that seeks efficiency through better management and profits through industrial chain integration.

The Real “Gray Rhino”: The Disruptive Threat of Solid-State Batteries

Yet, compared to the cyclical industry price war, a larger and more fatal shadow looms over Enjie—the all-solid-state battery, hailed as the ultimate form of next-generation batteries.
The core of the problem is brutal and straightforward: in theory, all-solid-state batteries do not require separators.
Imagine spending years building a dominant position as the world’s largest candlewick supplier—only for the light bulb to be invented overnight. That is the long-term existential challenge Enjie faces. In 2024, 81.2% of the company’s revenue came from lithium battery separators. If this business is disrupted, it would spell disaster.
So, when will this “Sword of Damocles” fall? A rational analysis is needed:
The current industry consensus points to a gradual transition: liquid batteries → semi-solid-state batteries → all-solid-state batteries. Semi-solid-state batteries still require separators, providing Enjie with a valuable “escape window”. Moreover, the industry generally agrees that large-scale, low-cost commercialization of all-solid-state batteries will take another 5 to 10 years, or even longer.
This is Enjie’s most solid buffer. Currently, the core raw material cost of the best-performing sulfide solid electrolytes is over a hundred times that of liquid electrolytes. The overall cost of all-solid-state batteries is prohibitively high, meaning they are destined to be used only in ultra-high-end fields such as aerospace and deep-sea exploration for a long time, unable to shake the mainstream market of power batteries and energy storage batteries.
But this does not mean Enjie can rest easy. Once the wave of technological change is set in motion, it cannot be reversed. The company must find a second lifeline within this limited window.

Betting on Solid Electrolytes: From “Separator King” to “Materials Supplier”

Enjie is not sitting idly by. Its response strategy is clearly reflected in the direction of its R&D investment.
Even amid losses in 2024, the company’s R&D expenditure reached a substantial 663 million yuan, with continued increases. Where is this money going? The answer points directly to the future:
  1. Defending the Semi-Solid-State Fortress: Its subsidiary already has mass production and supply capabilities for semi-solid-state battery separators, actively expanding the market to ensure it does not fall behind during the transition period.
  2. Betting Big on the All-Solid-State Future: The company has strategically shifted its R&D focus to sulfide solid electrolytes—a technical route widely regarded as having the greatest long-term potential. In October 2025, the company announced that its pilot production line for high-purity lithium sulfide has been completed, and its 10-tonne production line for solid electrolytes has been put into operation.
  3. Opening a New Front in Energy Storage: Simultaneously, the company is seizing the opportunity of the booming energy storage market to drive product transformation, hoping to offset fluctuations in the power battery market with growing demand for energy storage batteries.
This means Enjie is attempting a risky identity transformation: evolving from a separator supplier in the liquid battery era to a core materials provider (solid electrolytes) in the solid-state battery era.
This is a thorny path. The technical routes and production processes of solid electrolytes are completely different from those of separators, equivalent to building an entirely new and equally competitive business on top of existing operations.
In the view of Yan Xi, Enjie’s predicament epitomizes the challenges faced by many leading Chinese manufacturers that rose to prominence by dominating a single technical high ground. They have reaped enormous dividends from technological breakthroughs, but are also more vulnerable to “precision strikes” from changes in technical routes.
Its self-rescue strategy is a combination of short-term defense and long-term offense:
  • Short Term (1–3 years): Reduce costs and boost efficiency through vertical integration (acquiring Zhongke Hualian) to weather the industry downturn; simultaneously, firmly grasp the transitional demand for semi-solid-state batteries and expand into the energy storage market to stabilize its core business.
  • Long Term (5–10 years): Go all-in on R&D, betting heavily on the sulfide solid electrolyte track to secure a future as a core supplier in a brand-new field.
This high-stakes gamble carries substantial risks:
  1. Cash Flow Pressure: With its core business losing money, continuous capital injection is required for mergers and acquisitions as well as cutting-edge R&D—placing extreme pressure on the company’s cash flow.
  2. Technical Route Risk: If the sulfide route fails to become the ultimate winner, or if the company’s R&D progress lags behind competitors, huge investments may be wasted.
  3. Transformation Execution Risk: Expanding from equipment to separators and then to electrolytes exponentially increases management complexity, placing extraordinary demands on the company’s strategic resolve and organizational capabilities.
The market’s current valuation of Enjie is a complex mix of discount and premium: discounted for the brutal price war and loss-making financial statements in the present; and premium for its global leading market share and its ambition to “regain the throne” in the solid-state battery era.
Its acquisition of a loss-making equipment supplier is not for simple financial consolidation, but to dig deeper trenches for survival. Its huge investment in the uncertain future of solid electrolytes is not chasing buzzwords, but buying a potential ticket to a new continent for long-term sustainability.
The crown of the “Separator King” is already cracked. With its actions, Enjie has made it clear that it is unwilling to be merely a king of the old era—it aspires to become one of the founders of the new era.