diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-0.4.0.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-0.4.2.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-0.4.0.ebuild
rename to sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-0.4.2.ebuild
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-9999.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-9999.ebuild
index 0e0271e5bb..86392ee322 100644
--- a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-9999.ebuild
+++ b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/coreos-cloudinit-9999.ebuild
@@ -9,11 +9,11 @@ CROS_WORKON_REPO="git://github.com"
 if [[ "${PV}" == 9999 ]]; then
 	KEYWORDS="~amd64"
 else
-	CROS_WORKON_COMMIT="0fddd1735d013b6e6c78b232329c0ea4d5b709be"  # v0.4.0
+	CROS_WORKON_COMMIT="13a3d892ca557c7474fdb17a7562697a05464290"  # v0.4.2
 	KEYWORDS="amd64"
 fi
 
-inherit cros-workon systemd
+inherit cros-workon systemd udev
 
 DESCRIPTION="coreos-cloudinit"
 HOMEPAGE="https://github.com/coreos/coreos-cloudinit"
@@ -36,7 +36,9 @@ src_compile() {
 
 src_install() {
 	dobin ${S}/bin/coreos-cloudinit
-	systemd_dounit "${FILESDIR}"/coreos-cloudinit@.service
-	systemd_dounit "${FILESDIR}"/cloud-config.target
-	systemd_enable_service default.target cloud-config.target
+	udev_dorules units/*.rules
+	systemd_dounit units/*.service
+	systemd_dounit units/*.target
+	systemd_enable_service default.target system-config.target
+	systemd_enable_service default.target user-config.target
 }
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/files/cloud-config.target b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/files/cloud-config.target
deleted file mode 100644
index 97029e1a36..0000000000
--- a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/files/cloud-config.target
+++ /dev/null
@@ -1,9 +0,0 @@
-[Unit]
-# Load OEM and coreos-install cloud-configs by default
-Requires=coreos-cloudinit@usr-share-oem-cloud\x2dconfig.yml.service
-After=coreos-cloudinit@usr-share-oem-cloud\x2dconfig.yml.service
-Requires=coreos-cloudinit@var-lib-coreos\x2dinstall-user_data.service
-After=coreos-cloudinit@var-lib-coreos\x2dinstall-user_data.service
-
-[Install]
-WantedBy=multi-user.target
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/files/coreos-cloudinit@.service b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/files/coreos-cloudinit@.service
deleted file mode 100644
index 1051bdb063..0000000000
--- a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-cloudinit/files/coreos-cloudinit@.service
+++ /dev/null
@@ -1,13 +0,0 @@
-[Unit]
-Description=Load cloud-config from %f
-Requires=dbus.service
-After=dbus.service
-RequiresMountsFor=%f
-ConditionFileNotEmpty=%f
-
-[Service]
-Type=oneshot
-ExecStart=/usr/bin/coreos-cloudinit --from-file=%f
- 
-[Install]
-WantedBy=cloud-config.target
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-0.0.1-r73.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-0.0.1-r74.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-0.0.1-r73.ebuild
rename to sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-0.0.1-r74.ebuild
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild
index 0034097682..938fed99f6 100644
--- a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild
+++ b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos-init/coreos-init-9999.ebuild
@@ -10,7 +10,7 @@ CROS_WORKON_REPO="git://github.com"
 if [[ "${PV}" == 9999 ]]; then
 	KEYWORDS="~amd64 ~arm ~x86"
 else
-	CROS_WORKON_COMMIT="c8b9546f43336fc6fcb4e3a6f7953273599f74af"
+	CROS_WORKON_COMMIT="c7db6522790cb82789b0b6e579eeb49a17ca61bf"
 	KEYWORDS="amd64 arm x86"
 fi
 
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/files/cloud-config.yml b/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/files/cloud-config.yml
index 81638f49f4..14161d6575 100644
--- a/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/files/cloud-config.yml
+++ b/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/files/cloud-config.yml
@@ -28,26 +28,6 @@ coreos:
 
           [Service]
           ExecStart=/usr/share/oem/bin/nova-agent-watcher -watch-dir=/usr/share/oem/nova-agent -scripts-dir=/usr/share/oem/bin/
-      - name: media-configdrive.mount
-        command: restart
-        runtime: yes
-        content: |
-          [Mount]
-          What=/dev/disk/by-label/config-2
-          Where=/media/configdrive
-      - name: cloudinit-configdrive.service
-        command: restart
-        runtime: yes
-        content: |
-          [Unit]
-          RequiresMountsFor=/media/configdrive
-          Requires=coreos-setup-environment.service
-          After=coreos-setup-environment.service
-
-          [Service]
-          Type=oneshot
-          EnvironmentFile=/etc/environment
-          ExecStart=/usr/bin/coreos-cloudinit --from-file=/media/configdrive/openstack/latest/user_data
     oem:
       id: rackspace
       name: Rackspace Cloud Servers
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/oem-rackspace-0.0.1-r7.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/oem-rackspace-0.0.1-r8.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/oem-rackspace-0.0.1-r7.ebuild
rename to sdk_container/src/third_party/coreos-overlay/coreos-base/oem-rackspace/oem-rackspace-0.0.1-r8.ebuild
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/files/cloud-config.yml b/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/files/cloud-config.yml
index 529a4b16ab..8b3f7cbb59 100644
--- a/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/files/cloud-config.yml
+++ b/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/files/cloud-config.yml
@@ -7,20 +7,7 @@ coreos:
         content: |
           [Path]
           PathExists=/var/lib/coreos-vagrant/user-data
-
-          [Install]
-          WantedBy=multi-user.target
-      - name: coreos-cloudinit-vagrant.service
-        runtime: no
-        content: |
-          [Unit]
-          ConditionFileNotEmpty=/var/lib/coreos-vagrant/user-data
-
-          [Service]
-          Type=oneshot
-          EnvironmentFile=-/etc/environment
-          ExecStart=/usr/bin/coreos-cloudinit --from-file /var/lib/coreos-vagrant/user-data
-          RemainAfterExit=yes
+          Unit=user-cloudinit@var-lib-coreos\x2dvagrant-user\x2ddata.service
     oem:
       id: vagrant
       name: Vagrant
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/oem-vagrant-0.0.1-r6.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/oem-vagrant-0.0.1-r7.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/oem-vagrant-0.0.1-r6.ebuild
rename to sdk_container/src/third_party/coreos-overlay/coreos-base/oem-vagrant/oem-vagrant-0.0.1-r7.ebuild