RCP Application not launching correctly after updating - eclipse

Question

I have an RCP application that I'm trying to update to a newer version. Selecting the update-site zip and walking through the Install/ Update wizard works fine. Before the restart dialog show pops up, I do see the following:
enter image description here
After restarting, I see framework exceptions, some panels/ UI elements not being able to load, and CoreExceptions. It's almost as if the plugins that are updated cannot be found/ resolved in the application anymore. I've checked the install plugins/ and features/ directory and they are in fact present. A subsequent restart resolves the issues.
Why do the new bundles not resolve after the Update/Install restart wizard?
This is what my base RCP application .product looks like:
<?xml version="1.0" encoding="UTF-8"?>
<?pde version="3.5"?>
<product name="RCP Application" uid="com.ibm.rcp.product" id="my.rcp.ide" application="org.eclipse.ui.ide.workbench" version="1.0.0.qualifier" useFeatures="true" includeLaunchers="true" autoIncludeRequirements="true">
<aboutInfo>
<image path="about/rcp.gif"/>
<text>
%blurb
</text>
</aboutInfo>
<configIni use="default">
</configIni>
<launcherArgs>
<programArgs>-showlocation
-pluginCustomization plugin_customization.ini
--launcher.defaultAction
openFile
--launcher.appendVmargs
</programArgs>
<programArgsLin>-vm jdk/bin/java
--launcher.GTK_version 3
</programArgsLin>
<programArgsMac>-vm ../Eclipse/jdk/Contents/Home/bin/java
</programArgsMac>
<programArgsWin>-vm jdk/bin/javaw
</programArgsWin>
<vmArgs>-Dosgi.requiredJavaVersion=11
-Dsun.java.command=Eclipse
-XX:+UseG1GC
-XX:+UseStringDeduplication
--add-modules=ALL-SYSTEM
-Dosgi.requiredJavaVersion=11
-Dosgi.dataAreaRequiresExplicitInit=true
-Dorg.eclipse.swt.graphics.Resource.reportNonDisposed=false
-Xms256m
-Xmx2048m
</vmArgs>
<vmArgsMac>-XstartOnFirstThread
-Dorg.eclipse.swt.internal.carbon.smallFonts
</vmArgsMac>
</launcherArgs>
<windowImages i16=" ... my ... rcp ... icons"/>
<splash
location="my.rcp.product"
startupProgressRect="0,260,574,8"
startupMessageRect="10,235,320,20"
startupForegroundColor="0F62FE" />
<launcher name="myapp">
<linux icon="/icons/rcp.xpm"/>
<macosx icon="/icons/rcp.icns"/>
<win useIco="true">
<ico path="/icons/rcp.ico"/>
<bmp/>
</win>
</launcher>
<intro introId="org.eclipse.ui.intro.universal"/>
<vm>
</vm>
<plugins>
</plugins>
<features>
<feature id="my.rcp.feature" installMode="root"/>
...some eclipse features...
</features>
<configurations>
<plugin id="org.apache.felix.scr" autoStart="true" startLevel="2" />
<plugin id="org.eclipse.core.runtime" autoStart="true" startLevel="0" />
<plugin id="org.eclipse.equinox.common" autoStart="true" startLevel="2" />
<plugin id="org.eclipse.equinox.event" autoStart="true" startLevel="2" />
<plugin id="org.eclipse.equinox.p2.reconciler.dropins" autoStart="true" startLevel="4" />
<plugin id="org.eclipse.equinox.simpleconfigurator" autoStart="true" startLevel="1" />
<property name="osgi.instance.area.default" value="#user.home/.workspace" />
<property name="eclipse.p2.skipMigrationWizard" value="true" />
</configurations>
<preferencesInfo>
<targetfile overwrite="false"/>
</preferencesInfo>
<cssInfo>
</cssInfo>
</product>