When HCX update fails

The recommended way is always to collect a HCX log bundle and open a case at VMware and to make sure HCX manager can access the following addresses: connect.hcx.vmware.com and hybridity-depot.vmware.com (where the upgrade bundle is located). The following command can be used for that:

openssl s_client -connect connect.hcx.vmware.com:443 -showcerts -servername connect.hcx.vmware.com

You should also check if there is enough space for the upgrade bundle in /tmp/upgrade/download:

Checking required disk space 5218 MB upgrade bundle in /tmp/upgrade/download
[VrealmUpgradeService_SvcThread-1, Enterprise: HybridityAdmin, Username: , TxId: ] INFO c.v.v.h.s.upgrade.DownloadFileJob- Downloading upgrade bundle from host https://hybridity-depot.vmware.com and path /tmp/upgrade/download VMware-HCX-Connector-upgrade-bundle-3.5.3-17114088.tar.gz

All the details related to update are logged in upgrade.log file here:

[admin@hcx /common/logs/upgrade]$ ls -l
total 36
-rw-r--r-- 1 root root 238 Dec 18 09:15 pre-upgrade-validation.properties
-rw-r--r-- 1 root root 101 Dec 18 09:20 upgrade-status.properties
-rw-r--r-- 1 root root 26802 Dec 18 09:20 upgrade.log

If this is a lab environment, you could experiment and delete the files under upgrade folder, restart app & web service (or HCX) and try again.