diff --git a/pkg/model/awsmodel/autoscalinggroup.go b/pkg/model/awsmodel/autoscalinggroup.go
index 394e2d2e9b..3de993608e 100644
--- a/pkg/model/awsmodel/autoscalinggroup.go
+++ b/pkg/model/awsmodel/autoscalinggroup.go
@@ -24,6 +24,7 @@ import (
 	"github.com/aws/aws-sdk-go/aws"
 	"github.com/aws/aws-sdk-go/service/ec2"
 	"k8s.io/klog/v2"
+
 	"k8s.io/kops/pkg/apis/kops"
 	"k8s.io/kops/pkg/featureflag"
 	"k8s.io/kops/pkg/model"
@@ -79,12 +80,14 @@ func (b *AutoscalingGroupModelBuilder) Build(c *fi.ModelBuilderContext) error {
 		c.AddTask(task)
 
 		// @step: now lets build the autoscaling group task
-		tsk, err := b.buildAutoScalingGroupTask(c, name, ig)
-		if err != nil {
-			return err
+		if ig.Spec.InstanceManager != "Karpenter" {
+			tsk, err := b.buildAutoScalingGroupTask(c, name, ig)
+			if err != nil {
+				return err
+			}
+			tsk.LaunchTemplate = task
+			c.AddTask(tsk)
 		}
-		tsk.LaunchTemplate = task
-		c.AddTask(tsk)
 
 		warmPool := b.Cluster.Spec.WarmPool.ResolveDefaults(ig)
 		{
diff --git a/pkg/model/awsmodel/nodeterminationhandler.go b/pkg/model/awsmodel/nodeterminationhandler.go
index 772413e2fa..3287e2dc9e 100644
--- a/pkg/model/awsmodel/nodeterminationhandler.go
+++ b/pkg/model/awsmodel/nodeterminationhandler.go
@@ -25,6 +25,7 @@ import (
 	"k8s.io/kops/upup/pkg/fi/cloudup/awsup"
 
 	"github.com/aws/aws-sdk-go/aws"
+
 	"k8s.io/kops/pkg/apis/kops"
 	"k8s.io/kops/upup/pkg/fi"
 )
@@ -80,9 +81,11 @@ type NodeTerminationHandlerBuilder struct {
 
 func (b *NodeTerminationHandlerBuilder) Build(c *fi.ModelBuilderContext) error {
 	for _, ig := range b.InstanceGroups {
-		err := b.configureASG(c, ig)
-		if err != nil {
-			return err
+		if ig.Spec.InstanceManager == kops.InstanceManagerCloudGroup {
+			err := b.configureASG(c, ig)
+			if err != nil {
+				return err
+			}
 		}
 	}
 
diff --git a/tests/integration/create_cluster/complex/expected-v1alpha2.yaml b/tests/integration/create_cluster/complex/expected-v1alpha2.yaml
index 1b416599ca..ecf6f14ac7 100644
--- a/tests/integration/create_cluster/complex/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/complex/expected-v1alpha2.yaml
@@ -64,6 +64,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -84,6 +85,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/gce_byo_sa/expected-v1alpha2.yaml b/tests/integration/create_cluster/gce_byo_sa/expected-v1alpha2.yaml
index d433f0a5be..bf0f00317f 100644
--- a/tests/integration/create_cluster/gce_byo_sa/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/gce_byo_sa/expected-v1alpha2.yaml
@@ -65,6 +65,7 @@ metadata:
   name: master-us-test1-a
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-1
   maxSize: 1
   minSize: 1
@@ -88,6 +89,7 @@ metadata:
   name: nodes-us-test1-a
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-2
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/ha/expected-v1alpha2.yaml b/tests/integration/create_cluster/ha/expected-v1alpha2.yaml
index a2131e0256..4142d2e51d 100644
--- a/tests/integration/create_cluster/ha/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ha/expected-v1alpha2.yaml
@@ -85,6 +85,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -105,6 +106,7 @@ metadata:
   name: master-us-test-1b
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -125,6 +127,7 @@ metadata:
   name: master-us-test-1c
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -145,6 +148,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
@@ -165,6 +169,7 @@ metadata:
   name: nodes-us-test-1b
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
@@ -185,6 +190,7 @@ metadata:
   name: nodes-us-test-1c
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/ha_encrypt/expected-v1alpha2.yaml b/tests/integration/create_cluster/ha_encrypt/expected-v1alpha2.yaml
index a2131e0256..4142d2e51d 100644
--- a/tests/integration/create_cluster/ha_encrypt/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ha_encrypt/expected-v1alpha2.yaml
@@ -85,6 +85,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -105,6 +106,7 @@ metadata:
   name: master-us-test-1b
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -125,6 +127,7 @@ metadata:
   name: master-us-test-1c
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -145,6 +148,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
@@ -165,6 +169,7 @@ metadata:
   name: nodes-us-test-1b
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
@@ -185,6 +190,7 @@ metadata:
   name: nodes-us-test-1c
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/ha_gce/expected-v1alpha2.yaml b/tests/integration/create_cluster/ha_gce/expected-v1alpha2.yaml
index e1ab6da893..22cc833ed4 100644
--- a/tests/integration/create_cluster/ha_gce/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ha_gce/expected-v1alpha2.yaml
@@ -73,6 +73,7 @@ metadata:
   name: master-us-test1-a
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-1
   maxSize: 1
   minSize: 1
@@ -96,6 +97,7 @@ metadata:
   name: master-us-test1-b
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-1
   maxSize: 1
   minSize: 1
@@ -119,6 +121,7 @@ metadata:
   name: master-us-test1-c
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-1
   maxSize: 1
   minSize: 1
@@ -142,6 +145,7 @@ metadata:
   name: nodes-us-test1-a
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-2
   maxSize: 1
   minSize: 1
@@ -165,6 +169,7 @@ metadata:
   name: nodes-us-test1-b
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-2
   maxSize: 1
   minSize: 1
@@ -188,6 +193,7 @@ metadata:
   name: nodes-us-test1-c
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-2
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/ha_shared_zone/expected-v1alpha2.yaml b/tests/integration/create_cluster/ha_shared_zone/expected-v1alpha2.yaml
index 1e10778abf..d1f94b6bc0 100644
--- a/tests/integration/create_cluster/ha_shared_zone/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ha_shared_zone/expected-v1alpha2.yaml
@@ -77,6 +77,7 @@ metadata:
   name: master-us-test-1a-1
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -97,6 +98,7 @@ metadata:
   name: master-us-test-1a-2
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -117,6 +119,7 @@ metadata:
   name: master-us-test-1a-3
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -137,6 +140,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/ha_shared_zones/expected-v1alpha2.yaml b/tests/integration/create_cluster/ha_shared_zones/expected-v1alpha2.yaml
index 411454465c..16da87cbc0 100644
--- a/tests/integration/create_cluster/ha_shared_zones/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ha_shared_zones/expected-v1alpha2.yaml
@@ -93,6 +93,7 @@ metadata:
   name: master-us-test-1a-1
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -113,6 +114,7 @@ metadata:
   name: master-us-test-1a-2
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -133,6 +135,7 @@ metadata:
   name: master-us-test-1a-3
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -153,6 +156,7 @@ metadata:
   name: master-us-test-1b-1
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -173,6 +177,7 @@ metadata:
   name: master-us-test-1b-2
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -193,6 +198,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
@@ -213,6 +219,7 @@ metadata:
   name: nodes-us-test-1b
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/ingwspecified/expected-v1alpha2.yaml b/tests/integration/create_cluster/ingwspecified/expected-v1alpha2.yaml
index 729838a4f8..8e7178a6a7 100644
--- a/tests/integration/create_cluster/ingwspecified/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ingwspecified/expected-v1alpha2.yaml
@@ -74,6 +74,7 @@ metadata:
   name: bastions
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.micro
   maxSize: 1
   minSize: 1
@@ -94,6 +95,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -114,6 +116,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/ipv6/expected-v1alpha2.yaml b/tests/integration/create_cluster/ipv6/expected-v1alpha2.yaml
index b62c91b66e..5304026462 100644
--- a/tests/integration/create_cluster/ipv6/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ipv6/expected-v1alpha2.yaml
@@ -67,6 +67,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   instanceMetadata:
     httpPutResponseHopLimit: 3
     httpTokens: required
@@ -90,6 +91,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   instanceMetadata:
     httpPutResponseHopLimit: 1
     httpTokens: required
diff --git a/tests/integration/create_cluster/minimal-1.18/expected-v1alpha2.yaml b/tests/integration/create_cluster/minimal-1.18/expected-v1alpha2.yaml
index f8a2a4e58c..ec4a6fb0ee 100644
--- a/tests/integration/create_cluster/minimal-1.18/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/minimal-1.18/expected-v1alpha2.yaml
@@ -65,6 +65,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -85,6 +86,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/minimal-1.19/expected-v1alpha2.yaml b/tests/integration/create_cluster/minimal-1.19/expected-v1alpha2.yaml
index 8aa10625ee..4cec7f0f24 100644
--- a/tests/integration/create_cluster/minimal-1.19/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/minimal-1.19/expected-v1alpha2.yaml
@@ -65,6 +65,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -85,6 +86,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/minimal-1.20/expected-v1alpha2.yaml b/tests/integration/create_cluster/minimal-1.20/expected-v1alpha2.yaml
index bbb082cb66..3960ae47c9 100644
--- a/tests/integration/create_cluster/minimal-1.20/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/minimal-1.20/expected-v1alpha2.yaml
@@ -65,6 +65,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -85,6 +86,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/minimal-1.21/expected-v1alpha2.yaml b/tests/integration/create_cluster/minimal-1.21/expected-v1alpha2.yaml
index bbb082cb66..3960ae47c9 100644
--- a/tests/integration/create_cluster/minimal-1.21/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/minimal-1.21/expected-v1alpha2.yaml
@@ -65,6 +65,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -85,6 +86,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/minimal-1.22/expected-v1alpha2.yaml b/tests/integration/create_cluster/minimal-1.22/expected-v1alpha2.yaml
index 60ece11212..7dde515496 100644
--- a/tests/integration/create_cluster/minimal-1.22/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/minimal-1.22/expected-v1alpha2.yaml
@@ -65,6 +65,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   instanceMetadata:
     httpPutResponseHopLimit: 3
     httpTokens: required
@@ -88,6 +89,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   instanceMetadata:
     httpPutResponseHopLimit: 1
     httpTokens: required
diff --git a/tests/integration/create_cluster/minimal-1.23/expected-v1alpha2.yaml b/tests/integration/create_cluster/minimal-1.23/expected-v1alpha2.yaml
index 67d0345559..2462129ec2 100644
--- a/tests/integration/create_cluster/minimal-1.23/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/minimal-1.23/expected-v1alpha2.yaml
@@ -65,6 +65,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   instanceMetadata:
     httpPutResponseHopLimit: 3
     httpTokens: required
@@ -88,6 +89,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   instanceMetadata:
     httpPutResponseHopLimit: 1
     httpTokens: required
diff --git a/tests/integration/create_cluster/ngwspecified/expected-v1alpha2.yaml b/tests/integration/create_cluster/ngwspecified/expected-v1alpha2.yaml
index b432f78124..0a798de54d 100644
--- a/tests/integration/create_cluster/ngwspecified/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/ngwspecified/expected-v1alpha2.yaml
@@ -74,6 +74,7 @@ metadata:
   name: bastions
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.micro
   maxSize: 1
   minSize: 1
@@ -94,6 +95,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -114,6 +116,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/overrides/expected-v1alpha2.yaml b/tests/integration/create_cluster/overrides/expected-v1alpha2.yaml
index a0a1174099..7f435ad173 100644
--- a/tests/integration/create_cluster/overrides/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/overrides/expected-v1alpha2.yaml
@@ -68,6 +68,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -88,6 +89,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/private/expected-v1alpha2.yaml b/tests/integration/create_cluster/private/expected-v1alpha2.yaml
index 9d5e89339c..693f50ecdc 100644
--- a/tests/integration/create_cluster/private/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/private/expected-v1alpha2.yaml
@@ -77,6 +77,7 @@ metadata:
   name: bastions
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.micro
   maxSize: 1
   minSize: 1
@@ -100,6 +101,7 @@ spec:
   - sg-exampleid3
   - sg-exampleid4
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -123,6 +125,7 @@ spec:
   - sg-exampleid
   - sg-exampleid2
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/private_gce/expected-v1alpha2.yaml b/tests/integration/create_cluster/private_gce/expected-v1alpha2.yaml
index 4c8f859085..59aa216768 100644
--- a/tests/integration/create_cluster/private_gce/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/private_gce/expected-v1alpha2.yaml
@@ -72,6 +72,7 @@ metadata:
   name: bastions
 spec:
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: f1-micro
   maxSize: 1
   minSize: 1
@@ -98,6 +99,7 @@ spec:
   - sg-exampleid3
   - sg-exampleid4
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-1
   maxSize: 1
   minSize: 1
@@ -124,6 +126,7 @@ spec:
   - sg-exampleid
   - sg-exampleid2
   image: ubuntu-os-cloud/ubuntu-2004-focal-v20211118
+  instanceManager: CloudGroup
   machineType: n1-standard-2
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/private_shared_subnets/expected-v1alpha2.yaml b/tests/integration/create_cluster/private_shared_subnets/expected-v1alpha2.yaml
index 10ca073d3c..6e70791362 100644
--- a/tests/integration/create_cluster/private_shared_subnets/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/private_shared_subnets/expected-v1alpha2.yaml
@@ -74,6 +74,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -94,6 +95,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/shared_subnets/expected-v1alpha2.yaml b/tests/integration/create_cluster/shared_subnets/expected-v1alpha2.yaml
index a2847cf5bc..36357e5a5f 100644
--- a/tests/integration/create_cluster/shared_subnets/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/shared_subnets/expected-v1alpha2.yaml
@@ -67,6 +67,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -87,6 +88,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/shared_subnets_vpc_lookup/expected-v1alpha2.yaml b/tests/integration/create_cluster/shared_subnets_vpc_lookup/expected-v1alpha2.yaml
index a2847cf5bc..36357e5a5f 100644
--- a/tests/integration/create_cluster/shared_subnets_vpc_lookup/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/shared_subnets_vpc_lookup/expected-v1alpha2.yaml
@@ -67,6 +67,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -87,6 +88,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/create_cluster/shared_vpc/expected-v1alpha2.yaml b/tests/integration/create_cluster/shared_vpc/expected-v1alpha2.yaml
index 86dafd4d05..b00d62cefa 100644
--- a/tests/integration/create_cluster/shared_vpc/expected-v1alpha2.yaml
+++ b/tests/integration/create_cluster/shared_vpc/expected-v1alpha2.yaml
@@ -66,6 +66,7 @@ metadata:
   name: master-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: m3.medium
   maxSize: 1
   minSize: 1
@@ -86,6 +87,7 @@ metadata:
   name: nodes-us-test-1a
 spec:
   image: 099720109477/ubuntu/images/hvm-ssd/ubuntu-focal-20.04-amd64-server-20211118
+  instanceManager: CloudGroup
   machineType: t2.medium
   maxSize: 1
   minSize: 1
diff --git a/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-bootstrap_content b/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-bootstrap_content
index 18d504a801..a3798692b0 100644
--- a/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-bootstrap_content
+++ b/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-bootstrap_content
@@ -54,7 +54,7 @@ spec:
     version: 9.99.0
   - id: k8s-1.19
     manifest: karpenter.sh/k8s-1.19.yaml
-    manifestHash: d31ab5979f05095a9ec57bbbf1a2ac14a52a9e321d7732832dcd14f44be39551
+    manifestHash: f5bf5ee51335406c3ad93bfa6cea5778dfddba76f353da2b89bfdc30b925bd13
     name: karpenter.sh
     needsPKI: true
     selector:
diff --git a/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-karpenter.sh-k8s-1.19_content b/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-karpenter.sh-k8s-1.19_content
index ece199ae8c..e45fa59d72 100644
--- a/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-karpenter.sh-k8s-1.19_content
+++ b/tests/integration/update_cluster/karpenter/data/aws_s3_bucket_object_minimal.example.com-addons-karpenter.sh-k8s-1.19_content
@@ -864,7 +864,7 @@ spec:
       cpu: 1000
   provider:
     instanceProfile: nodes.minimal.example.com
-    launchTemplate: karpenter-nodes
+    launchTemplate: karpenter-nodes.minimal.example.com
     securityGroupSelector:
       Name: nodes.minimal.example.com
     subnetSelector:
diff --git a/tests/integration/update_cluster/karpenter/kubernetes.tf b/tests/integration/update_cluster/karpenter/kubernetes.tf
index 1e923988c7..6e38358a48 100644
--- a/tests/integration/update_cluster/karpenter/kubernetes.tf
+++ b/tests/integration/update_cluster/karpenter/kubernetes.tf
@@ -10,7 +10,7 @@ locals {
   master_security_group_ids            = [aws_security_group.masters-minimal-example-com.id]
   masters_role_arn                     = aws_iam_role.masters-minimal-example-com.arn
   masters_role_name                    = aws_iam_role.masters-minimal-example-com.name
-  node_autoscaling_group_ids           = [aws_autoscaling_group.karpenter-nodes-minimal-example-com.id, aws_autoscaling_group.nodes-minimal-example-com.id]
+  node_autoscaling_group_ids           = [aws_autoscaling_group.nodes-minimal-example-com.id]
   node_security_group_ids              = [aws_security_group.nodes-minimal-example-com.id]
   node_subnet_ids                      = [aws_subnet.us-test-1a-minimal-example-com.id]
   nodes_role_arn                       = aws_iam_role.nodes-minimal-example-com.arn
@@ -67,7 +67,7 @@ output "masters_role_name" {
 }
 
 output "node_autoscaling_group_ids" {
-  value = [aws_autoscaling_group.karpenter-nodes-minimal-example-com.id, aws_autoscaling_group.nodes-minimal-example-com.id]
+  value = [aws_autoscaling_group.nodes-minimal-example-com.id]
 }
 
 output "node_security_group_ids" {
@@ -115,55 +115,6 @@ provider "aws" {
   region = "us-test-1"
 }
 
-resource "aws_autoscaling_group" "karpenter-nodes-minimal-example-com" {
-  enabled_metrics = ["GroupDesiredCapacity", "GroupInServiceInstances", "GroupMaxSize", "GroupMinSize", "GroupPendingInstances", "GroupStandbyInstances", "GroupTerminatingInstances", "GroupTotalInstances"]
-  launch_template {
-    id      = aws_launch_template.karpenter-nodes-minimal-example-com.id
-    version = aws_launch_template.karpenter-nodes-minimal-example-com.latest_version
-  }
-  max_size              = 2
-  metrics_granularity   = "1Minute"
-  min_size              = 2
-  name                  = "karpenter-nodes.minimal.example.com"
-  protect_from_scale_in = false
-  tag {
-    key                 = "KubernetesCluster"
-    propagate_at_launch = true
-    value               = "minimal.example.com"
-  }
-  tag {
-    key                 = "Name"
-    propagate_at_launch = true
-    value               = "karpenter-nodes.minimal.example.com"
-  }
-  tag {
-    key                 = "k8s.io/cluster-autoscaler/node-template/label/kubernetes.io/role"
-    propagate_at_launch = true
-    value               = "node"
-  }
-  tag {
-    key                 = "k8s.io/cluster-autoscaler/node-template/label/node-role.kubernetes.io/node"
-    propagate_at_launch = true
-    value               = ""
-  }
-  tag {
-    key                 = "k8s.io/role/node"
-    propagate_at_launch = true
-    value               = "1"
-  }
-  tag {
-    key                 = "kops.k8s.io/instancegroup"
-    propagate_at_launch = true
-    value               = "karpenter-nodes"
-  }
-  tag {
-    key                 = "kubernetes.io/cluster/minimal.example.com"
-    propagate_at_launch = true
-    value               = "owned"
-  }
-  vpc_zone_identifier = [aws_subnet.us-test-1a-minimal-example-com.id]
-}
-
 resource "aws_autoscaling_group" "master-us-test-1a-masters-minimal-example-com" {
   enabled_metrics = ["GroupDesiredCapacity", "GroupInServiceInstances", "GroupMaxSize", "GroupMinSize", "GroupPendingInstances", "GroupStandbyInstances", "GroupTerminatingInstances", "GroupTotalInstances"]
   launch_template {
diff --git a/upup/models/cloudup/resources/addons/karpenter.sh/k8s-1.19.yaml.template b/upup/models/cloudup/resources/addons/karpenter.sh/k8s-1.19.yaml.template
index 151a235840..26f2605958 100644
--- a/upup/models/cloudup/resources/addons/karpenter.sh/k8s-1.19.yaml.template
+++ b/upup/models/cloudup/resources/addons/karpenter.sh/k8s-1.19.yaml.template
@@ -667,7 +667,7 @@ spec:
       cpu: 1000
   provider:
     instanceProfile: nodes.{{ ClusterName }}
-    launchTemplate: {{ $name }}
+    launchTemplate: {{ $name }}.{{ ClusterName }}
     securityGroupSelector:
       Name: nodes.{{ ClusterName }}
     subnetSelector:
diff --git a/upup/pkg/fi/cloudup/awsup/aws_cloud.go b/upup/pkg/fi/cloudup/awsup/aws_cloud.go
index df96ea5d69..072d5d571e 100644
--- a/upup/pkg/fi/cloudup/awsup/aws_cloud.go
+++ b/upup/pkg/fi/cloudup/awsup/aws_cloud.go
@@ -51,6 +51,8 @@ import (
 
 	v1 "k8s.io/api/core/v1"
 	"k8s.io/apimachinery/pkg/util/sets"
+	k8s_aws "k8s.io/legacy-cloud-providers/aws"
+
 	"k8s.io/kops/dnsprovider/pkg/dnsprovider"
 	dnsproviderroute53 "k8s.io/kops/dnsprovider/pkg/dnsprovider/providers/aws/route53"
 	"k8s.io/kops/pkg/apis/kops"
@@ -60,7 +62,6 @@ import (
 	identity_aws "k8s.io/kops/pkg/nodeidentity/aws"
 	"k8s.io/kops/pkg/resources/spotinst"
 	"k8s.io/kops/upup/pkg/fi"
-	k8s_aws "k8s.io/legacy-cloud-providers/aws"
 )
 
 // By default, aws-sdk-go only retries 3 times, which doesn't give
@@ -622,7 +623,125 @@ func (c *awsCloudImplementation) GetCloudGroups(cluster *kops.Cluster, instanceg
 		return sgroups, nil
 	}
 
-	return getCloudGroups(c, cluster, instancegroups, warnUnmatched, nodes)
+	cloudGroups, err := getCloudGroups(c, cluster, instancegroups, warnUnmatched, nodes)
+	if err != nil {
+		return nil, err
+	}
+	karpenterGroups, err := getKarpenterGroups(c, cluster, instancegroups, nodes)
+	if err != nil {
+		return nil, err
+	}
+
+	for name, group := range karpenterGroups {
+		cloudGroups[name] = group
+	}
+	return cloudGroups, nil
+}
+
+func getKarpenterGroups(c AWSCloud, cluster *kops.Cluster, instancegroups []*kops.InstanceGroup, nodes []v1.Node) (map[string]*cloudinstances.CloudInstanceGroup, error) {
+	cloudGroups := make(map[string]*cloudinstances.CloudInstanceGroup)
+	for _, ig := range instancegroups {
+		if ig.Spec.InstanceManager == kops.InstanceManagerKarpenter {
+			group, err := buildKarpenterGroup(c, cluster, ig, nodes)
+			if err != nil {
+				return nil, err
+			}
+			cloudGroups[ig.ObjectMeta.Name] = group
+		}
+	}
+	return cloudGroups, nil
+}
+
+func buildKarpenterGroup(c AWSCloud, cluster *kops.Cluster, ig *kops.InstanceGroup, nodes []v1.Node) (*cloudinstances.CloudInstanceGroup, error) {
+	nodeMap := cloudinstances.GetNodeMap(nodes, cluster)
+	instances := make(map[string]*ec2.Instance)
+	updatedInstances := make(map[string]*ec2.Instance)
+	clusterName := c.Tags()[TagClusterName]
+	var version string
+
+	{
+		result, err := c.EC2().DescribeLaunchTemplates(&ec2.DescribeLaunchTemplatesInput{
+			Filters: []*ec2.Filter{
+				NewEC2Filter("tag:"+identity_aws.CloudTagInstanceGroupName, ig.ObjectMeta.Name),
+				NewEC2Filter("tag:"+TagClusterName, clusterName),
+			},
+		})
+		if err != nil {
+			return nil, err
+		}
+		lt := result.LaunchTemplates[0]
+		versionNumber := *lt.LatestVersionNumber
+		version = strconv.Itoa(int(versionNumber))
+
+	}
+
+	karpenterGroup := &cloudinstances.CloudInstanceGroup{
+		InstanceGroup: ig,
+		HumanName:     ig.ObjectMeta.Name,
+	}
+	{
+		req := &ec2.DescribeInstancesInput{
+			Filters: []*ec2.Filter{
+				NewEC2Filter("tag:"+identity_aws.CloudTagInstanceGroupName, ig.ObjectMeta.Name),
+				NewEC2Filter("tag:"+TagClusterName, clusterName),
+				NewEC2Filter("instance-state-name", "pending", "running", "stopping", "stopped"),
+			},
+		}
+
+		result, err := c.EC2().DescribeInstances(req)
+		if err != nil {
+			return nil, err
+		}
+
+		for _, r := range result.Reservations {
+			for _, i := range r.Instances {
+				id := aws.StringValue(i.InstanceId)
+				instances[id] = i
+			}
+		}
+	}
+
+	klog.Infof("found %d karpenter instances", len(instances))
+
+	{
+		req := &ec2.DescribeInstancesInput{
+			Filters: []*ec2.Filter{
+				NewEC2Filter("tag:"+identity_aws.CloudTagInstanceGroupName, ig.ObjectMeta.Name),
+				NewEC2Filter("tag:"+TagClusterName, clusterName),
+				NewEC2Filter("instance-state-name", "pending", "running", "stopping", "stopped"),
+				NewEC2Filter("tag:aws:ec2launchtemplate:version", version),
+			},
+		}
+
+		result, err := c.EC2().DescribeInstances(req)
+		if err != nil {
+			return nil, err
+		}
+
+		for _, r := range result.Reservations {
+			for _, i := range r.Instances {
+				id := aws.StringValue(i.InstanceId)
+				updatedInstances[id] = i
+			}
+		}
+	}
+	klog.Infof("found %d updated instances", len(updatedInstances))
+
+	{
+		for _, instance := range instances {
+			id := *instance.InstanceId
+			_, ready := updatedInstances[id]
+			var status string
+			if ready {
+				status = cloudinstances.CloudInstanceStatusUpToDate
+			} else {
+				status = cloudinstances.CloudInstanceStatusNeedsUpdate
+			}
+			cloudInstance, _ := karpenterGroup.NewCloudInstance(id, status, nodeMap[id])
+			addCloudInstanceData(cloudInstance, instance)
+		}
+	}
+	return karpenterGroup, nil
 }
 
 func getCloudGroups(c AWSCloud, cluster *kops.Cluster, instancegroups []*kops.InstanceGroup, warnUnmatched bool, nodes []v1.Node) (map[string]*cloudinstances.CloudInstanceGroup, error) {
diff --git a/upup/pkg/fi/cloudup/populate_instancegroup_spec.go b/upup/pkg/fi/cloudup/populate_instancegroup_spec.go
index 1f9d241d48..d817ca7744 100644
--- a/upup/pkg/fi/cloudup/populate_instancegroup_spec.go
+++ b/upup/pkg/fi/cloudup/populate_instancegroup_spec.go
@@ -22,6 +22,7 @@ import (
 	"github.com/aws/aws-sdk-go/service/ec2"
 	"github.com/blang/semver/v4"
 	"k8s.io/klog/v2"
+
 	"k8s.io/kops/pkg/apis/kops"
 	"k8s.io/kops/pkg/apis/kops/util"
 	"k8s.io/kops/pkg/apis/kops/validation"
@@ -173,6 +174,10 @@ func PopulateInstanceGroupSpec(cluster *kops.Cluster, input *kops.InstanceGroup,
 			}
 		}
 	}
+
+	if ig.Spec.InstanceManager == "" {
+		ig.Spec.InstanceManager = kops.InstanceManagerCloudGroup
+	}
 	return ig, nil
 }