VMs are getting network connection issue due to vtep ip address lost

Products

• VMware NSX-T Data Center
• VMware vSphere ESXi 7.0
• VMware vSphere ESXi 8.0

Issue/Introduction

• VM network connection is lost, i.e. unable to connect to VM via remote desktop or ssh etc.
• VMs are connected to NSX-T overlay network, NSX-T TEP is configured to get ip address from DHCP server.
• It's found in vCenter VMkernel adapters page or in esxcfg-vmknic -l command output that TEP lost its ip address and changed to 169.254.X.X.

Environment

VMware NSX-T Data Center
VMware vSphere ESXi 7.0
VMware vSphere ESXi 8.0

Cause

NSX-T TEP fails to get ip address from DHCP server thus causing issue with overlay network connection.

Resolution

It's suggested to fix the issue in either of these ways:
1 Fix DHCP server issue so that TEP ip address can be allocated successfully.
2 Allocate TEP ips from static ip pool instead of DHCP server following procedure: Migration of NSX-T TEPS to Static IP pool from DHCP on VCF 4.2 and above