With the release of vCenter 7 Update 1, VMware introuced the vCLS (vSphere Clustering Service). More information can be found here.
Looking at the error details it looks like it is looking for a feature called cpuid.mwait
Reviewing the VMX file it seems like EVC is enabled on the vCLS VMs. I didnt want to enable EVC on the whole cluster so i wanted to do it only on the specific VMs.
Doing some research i found that the VMs need to be at version 14. After upgrading the VM i was able to disable EVC on the specific VMs by following these steps:
In the vSphere Client, navigate to the virtual machine
Under the Actions -> Compatibility -> Upgrade VM compatibility
We can disable EVC on per VM level on version 14 and above, so in my case i chose ESXi 6.7 and later
Next go to the Configure Tab
Pick VMware EVC and click on Edit
Click on Yes
Click on Disable EVC and Click OK
The next time it tries to power on the VM it should go through.
Once the first VM starts up it will most likely deploy a few additional ones, follow the same steps as above again on the new VMs