diff --git a/tests/cloud_playbooks/roles/packet-ci/templates/vm.yml.j2 b/tests/cloud_playbooks/roles/packet-ci/templates/vm.yml.j2
index 6d5e254be..87f9dbde8 100644
--- a/tests/cloud_playbooks/roles/packet-ci/templates/vm.yml.j2
+++ b/tests/cloud_playbooks/roles/packet-ci/templates/vm.yml.j2
@@ -55,13 +55,5 @@ spec:
       containerDisk:
         image: quay.io/kubespray/vm-{{ cloud_image }}
     - name: cloudinitvolume
-      cloudInitConfigDrive:
-        userData: |
-          #cloud-config
-           users:
-             - name: {{ lookup('env', 'ANSIBLE_REMOTE_USER') }}
-               sudo: ALL=(ALL) NOPASSWD:ALL
-               shell: /bin/bash
-               lock_passwd: False
-               ssh_authorized_keys:
-                 - {{ ssh_key.public_key }}
+      cloudInit{{ 'ConfigDrive' if cloud_image.startswith('flatcar') else 'NoCloud' }}:
+        userDataBase64: '{{ ((ignition_config | to_json) if cloud_image.startswith('flatcar') else cloudinit_config) | b64encode }}'
diff --git a/tests/cloud_playbooks/roles/packet-ci/vars/main.yml b/tests/cloud_playbooks/roles/packet-ci/vars/main.yml
index e8bac22e9..8953805e9 100644
--- a/tests/cloud_playbooks/roles/packet-ci/vars/main.yml
+++ b/tests/cloud_playbooks/roles/packet-ci/vars/main.yml
@@ -34,3 +34,25 @@ ci_job_id: "{{ lookup('ansible.builtin.env', 'CI_JOB_ID', default=undefined) }}"
 pod_name: "{{ lookup('ansible.builtin.env', 'POD_NAME', default=undefined) }}"
 pod_uid: "{{ lookup('ansible.builtin.env', 'POD_UID', default=undefined) }}"
 pod_namespace: "{{ lookup('ansible.builtin.env', 'POD_NAMESPACE', default=undefined) }}"
+
+cloudinit_config: |
+ #cloud-config
+  users:
+    - name: {{ lookup('env', 'ANSIBLE_REMOTE_USER') }}
+      sudo: ALL=(ALL) NOPASSWD:ALL
+      shell: /bin/bash
+      lock_passwd: False
+      ssh_authorized_keys:
+        - {{ ssh_key.public_key }}
+
+ignition_config:
+  ignition:
+    version: "3.2.0"
+  passwd:
+    users:
+      - name: "{{ lookup('env', 'ANSIBLE_REMOTE_USER') }}"
+        groups:
+          - sudo
+          - wheel
+        sshAuthorizedKeys:
+          - "{{ ssh_key.public_key }}"