diff --git a/build_library/oem_sysext_util.sh b/build_library/oem_sysext_util.sh
index e83effa01d..21e014db48 100755
--- a/build_library/oem_sysext_util.sh
+++ b/build_library/oem_sysext_util.sh
@@ -157,12 +157,17 @@ oem_sysext_create() {
         rm -rf "${entry}"
     done
 
-    local metadata metadata_file
+    local metadata metadata_file metadata_version_entry
     info "Adding sysext metadata"
     mkdir -p "${sysext_rootfs}/usr/lib/extension-release.d"
+    if [[ "${version_id}" = 'initial' ]]; then
+        metadata_version_entry="SYSEXT_LEVEL=1.0"
+    else
+        metadata_version_entry="VERSION_ID=${version_id}"
+    fi
     metadata=(
         'ID=flatcar'
-        "VERSION_ID=${version_id}"
+        "${metadata_version_entry}"
         "ARCHITECTURE=$(_get_sysext_arch "${board}")"
     )
     metadata_file="${sysext_rootfs}/usr/lib/extension-release.d/extension-release.${oem}"
diff --git a/build_library/vm_image_util.sh b/build_library/vm_image_util.sh
index b3c636f078..802f0aa137 100644
--- a/build_library/vm_image_util.sh
+++ b/build_library/vm_image_util.sh
@@ -548,13 +548,16 @@ install_oem_sysext() {
     local built_sysext_dir="${FLAGS_to}/${oem_sysext}-sysext"
     local built_sysext_filename="${oem_sysext}.raw"
     local built_sysext_path="${built_sysext_dir}/${built_sysext_filename}"
+    local build_oem_sysext_flags=(
+        --board="${BOARD}"
+        --build_dir="${built_sysext_dir}"
+        --prod_image_path="${VM_SRC_IMG}"
+        --prod_pkgdb_path="${VM_SRC_PKGDB}"
+        # TODO: Drop this when we implement updating OEM sysexts.
+        --version_id=initial
+    )
 
-    "${SCRIPT_ROOT}/build_oem_sysext" \
-        --board="${BOARD}" \
-        --build_dir="${built_sysext_dir}" \
-        --prod_image_path="${VM_SRC_IMG}" \
-        --prod_pkgdb_path="${VM_SRC_PKGDB}" \
-        "${oem_sysext}"
+    "${SCRIPT_ROOT}/build_oem_sysext" "${build_oem_sysext_flags[@]}" "${oem_sysext}"
 
     local installed_sysext_oem_dir='/oem/sysext'
     local installed_sysext_file_prefix="${oem_sysext}-${FLATCAR_VERSION}"