To execute Espresso tests in App Center Test the app APK and the test APK must be signed the same. They must both be signed using 

APKs signed with only a V2 (Full APK Signature) will not pass App Center Test validation and will not be executed. Tests for APKs signed differently than each other will fail at runtime.

When Espresso tests execute, the test code runs in process with your app and it is an Android security requirement that they be signed the same.

For compatibility with older devices, Android recommends & App Center Test requires that APKs contain a v1 signature:
"Older Android platforms ignore v2+ signatures and thus need apps to contain v1 signatures."  See Android Application Signing.

To upload Espresso tests with the release build of your app to App Center Test, it is mandatory to sign the application APK in release mode.

See Signing Your Applications in Android Developers Portal to understand how Android applications are signed. When generating a signed APK in Android Studio, it provides two Signature Version options:

App Center Test accepts APK files signed with Scheme V1 (Jar Signature), however it does not accept APK files just signed with the V2 (Full APK Signature) option. One can also check both the checkboxes while signing the APK. 

In order to run Espresso tests locally or in App Center Test it is mandatory to sign the test APK using the same signature as the application APK.
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