diff --git a/README.md b/README.md
index 2a5ad37..fe857c8 100644
--- a/README.md
+++ b/README.md
@@ -12,8 +12,8 @@ Arch Linux for ARM (Aarch64) on Lima
 ![Platform: ARM64](https://img.shields.io/badge/platform-ARM64-0091BD?logo=arm&logoColor=white)
 ![Apple Silicon](https://img.shields.io/badge/Apple-Silicon-green.svg)
 
-[![GitHub release](https://img.shields.io/github/v/release/mschirrmeister/archlinux-lima.svg?style=flat)](https://github.com/mschirrmeister/archlinux-lima/releases) 
-![Build](https://github.com/mschirrmeister/archlinux-lima/actions/workflows/build_image_cloud.yaml/badge.svg) [![Issues](https://img.shields.io/github/issues/mschirrmeister/archlinux-lima.svg)](https://github.com/mschirrmeister/archlinux-lima/issues) 
+[![GitHub release](https://img.shields.io/github/v/release/mschirrmeister/archlinux-lima.svg?style=flat)](https://github.com/mschirrmeister/archlinux-lima/releases)
+![Build](https://github.com/mschirrmeister/archlinux-lima/actions/workflows/build_image_cloud.yaml/badge.svg) [![Issues](https://img.shields.io/github/issues/mschirrmeister/archlinux-lima.svg)](https://github.com/mschirrmeister/archlinux-lima/issues)
 [![PRs](https://img.shields.io/github/issues-pr/mschirrmeister/archlinux-lima.svg)](https://github.com/mschirrmeister/archlinux-lima/pulls)
 
 [![Contributions welcome](https://img.shields.io/badge/contributions-welcome-brightgreen.svg?style=flat)](https://github.com/mschirrmeister/archlinux-lima/issues)
@@ -70,7 +70,7 @@ If you want to build an image yourself, clone the repo and build it locally.
 1. Build the image with a Lima VM
 
    ```shell
-   limactl start --name build-arch template://debian
+   limactl start --name build-arch template://ubuntu
    limactl shell build-arch
    ```
 
@@ -84,7 +84,7 @@ If you want to build an image yourself, clone the repo and build it locally.
 3. Back on your Mac generate a Lima template
 
    ```shell
-   ./create-archlinux-yaml.sh
+   ./create-archlinux-template.sh
    ```
 
 4. Start the VM
@@ -133,7 +133,7 @@ After the template is created you can start the VM with:
 
 ## 🛠️ Customize qcow2 image
 
-In case you want to create a customized image you can start a local VM via **qemu**, do all you changes and use the updated **qcow2** image in a new template.  
+In case you want to create a customized image you can start a local VM via **qemu**, do all you changes and use the updated **qcow2** image in a new template.
 On a Mac with Apple Silicon (only tested on M4) you can boot a VM with the following command.
 
 	qemu-system-aarch64 \
@@ -144,7 +144,7 @@ On a Mac with Apple Silicon (only tested on M4) you can boot a VM with the follo
 	    -m 2048 \
 	    -rtc base=utc \
 	    -drive if=pflash,format=raw,file="/opt/homebrew/share/qemu/edk2-aarch64-code.fd",readonly=on \
-	    -drive if=pflash,format=raw,file=edk2-arm-vars.fd \
+	    -drive if=pflash,format=raw,file="/opt/homebrew/share/qemu/edk2-arm-vars.fd" \
 	    -drive file="Arch-Linux-aarch64-cloudimg-20250510.0.qcow2",if=virtio,format=qcow2 \
 	    -boot menu=on \
 	    -nic user,id=NAT,model=virtio-net-pci,mac=02:00:00:00:00:01 \
@@ -297,14 +297,14 @@ And big love to all the upstream maintainers, contributors, and every open sourc
 
 ## 🤝 Pull Up & Contribute
 
-Ayo, this project’s open for all!  
+Ayo, this project’s open for all!
 If you got ideas, fixes, or just wanna chop it up about Arch on Apple Silicon, you in the right spot.
 
 - **Pull Requests:** Got code? Drop a PR, keep it clean, and let’s build together.
 - **Issues:** Something broke? Got a question? Throw it in the issues—no dumb questions here.
 - **Discussions:** Wanna vibe about setups, Lima tricks, or just flex your config? Start a thread, let’s get it.
 
-New to open source? Don’t trip—every contribution counts, and I got your back if you need help with your first PR.  
+New to open source? Don’t trip—every contribution counts, and I got your back if you need help with your first PR.
 Let’s make this repo legendary, together!
 
 
diff --git a/create-image.sh b/create-image.sh
index 30ccb36..7f4022f 100755
--- a/create-image.sh
+++ b/create-image.sh
@@ -179,7 +179,8 @@ colorecho "$GREEN" "Refresh package database..."
 pacman -Sy --noconfirm
 
 colorecho "$GREEN" "Installing latest linux-aarch64 kernel..."
-pacman -Sy linux-aarch64 --needed --noconfirm --nodeps --nodeps
+pacman -Sy linux-aarch64 --needed --noconfirm --nodeps
+
 colorecho "$GREEN" "Removing linux-firmware ..."
 pacman -Rdd linux-firmware linux-firmware-whence --noconfirm
 
@@ -187,15 +188,15 @@ colorecho "$GREEN" "Running full system upgrade ..."
 pacman -Syu --noconfirm
 
 colorecho "$GREEN" "Installing cloud-init ..."
-curl -LO --output-dir /tmp/ https://gist.githubusercontent.com/mschirrmeister/a009b8ce91a20bcc214c66f62aced9c9/raw/8c66f4d9bfb3ea05828f37ce420680eb007191de/cloud-init-23.1.2-2-any.pkg.tar.xz
-pacman -U /tmp/cloud-init-23.1.2-2-any.pkg.tar.xz --noconfirm
-rm -f /tmp/cloud-init-23.1.2-2-any.pkg.tar.xz
+cloudinit_pkg="cloud-init-25.1.2-1-any.pkg.tar.zst"
+curl -LO --output-dir /tmp/ "https://archive.archlinux.org/packages/c/cloud-init/$cloudinit_pkg"
+pacman -U /tmp/"$cloudinit_pkg" --needed --noconfirm
+rm -f /tmp/"$cloudinit_pkg"
+
 colorecho "$GREEN" "Enabling cloud-init services ..."
-systemctl enable cloud-init-local.service
-systemctl enable cloud-init.service
-systemctl enable cloud-config.service
+systemctl enable cloud-init-main.service
 systemctl enable cloud-final.service
-systemctl enable cloud-init-hotplugd.socket
+
 colorecho "$GREEN" "Clearing package cache ..."
 printf "y\ny\n" | pacman -Scc
 END
@@ -205,8 +206,8 @@ colorecho "$GREEN" "Copying boot partition files ..."
 sudo cp -r /mnt/arch-root/boot/* /mnt/arch-boot/
 sudo rm -rf /mnt/arch-root/boot/*
 
-# --- GRUB Install ---
-colorecho "$GREEN" "Installing GRUB bootloader ..."
+# --- Setting up boot partition ---
+colorecho "$GREEN" "Mounting boot partition ..."
 sudo mkdir -p /mnt/arch-root/boot
 sudo mount $BOOTP /mnt/arch-root/boot
 
@@ -228,9 +229,13 @@ colorecho "$GREEN" "Installing GRUB bootloader ..."
 pacman-key --init
 pacman-key --populate archlinuxarm
 pacman -Sy grub efibootmgr --noconfirm
-colorecho "$GREEN" "Clearing package cache ..."
+
+colorecho "$GREEN" "Installing cloud-guest-utils for rootfs auto-resize ..."
+pacman -Sy cloud-guest-utils --needed --noconfirm
+
 colorecho "$GREEN" "Append the following cmdline to grub: "
 sed -i "s/^GRUB_CMDLINE_LINUX_DEFAULT=\".*\"/GRUB_CMDLINE_LINUX_DEFAULT=\"console=ttyAMA0\"/" /etc/default/grub
+
 colorecho "$GREEN" "Installing GRUB ..."
 grub-install --target=arm64-efi --efi-directory=/boot --removable
 colorecho "$GREEN" "Generating GRUB config ..."
@@ -238,13 +243,23 @@ grub-mkconfig -o /boot/grub/grub.cfg
 
 colorecho "$GREEN" "Updating mirrors..."
 sed -i 's/^# Server/Server/' /etc/pacman.d/mirrorlist.save
-colorecho "$GREEN" "Installing pacman-contrib..."   
+
+colorecho "$GREEN" "Installing pacman-contrib..."
 pacman -S pacman-contrib --needed --noconfirm
+
 colorecho "$GREEN" "Ranking mirrors..."
 rankmirrors -n 5 /etc/pacman.d/mirrorlist.save | grep -v '^\s*#' | tee /etc/pacman.d/mirrorlist
+
+colorecho "$GREEN" "Clearing package cache ..."
 printf "y\ny\n" | pacman -Scc
 END
 
+# --- Zero out free space in root partition to improve compressibility ---
+colorecho "$GREEN" "Zeroing out free space in root partition ..."
+sudo dd if=/dev/zero of=/mnt/arch-root/zero.fill bs=1M status=progress || true
+sudo sync
+sudo rm -f /mnt/arch-root/zero.fill
+
 # --- Unmount boot if still mounted ---
 if mountpoint -q /mnt/arch-root/boot; then
     sudo umount /mnt/arch-root/boot || sudo umount -l /mnt/arch-root/boot
@@ -263,14 +278,14 @@ QCOW2_IMG="${IMAGE_NAME%.img}.qcow2"
 VMDK_IMG="${IMAGE_NAME%.img}.vmdk"
 
 colorecho "$GREEN" "Creating VM images ..."
-sudo qemu-img convert -O qcow2 "$RAW_IMG" "$QCOW2_IMG"
-sudo qemu-img convert -O vmdk "$RAW_IMG" "$VMDK_IMG"
+sudo qemu-img convert -p -O qcow2 "$RAW_IMG" "$QCOW2_IMG"
+sudo qemu-img convert -p -O vmdk "$RAW_IMG" "$VMDK_IMG"
 
 if [ "$COMPRESS" = 1 ]; then
     colorecho "$GREEN" "Compressing images ..."
-    sudo xz -T 0 "$RAW_IMG"
-    sudo xz -T 0 "$QCOW2_IMG"
-    sudo xz -T 0 "$VMDK_IMG"
+    sudo xz -T 0 --verbose "$RAW_IMG"
+    sudo xz -T 0 --verbose "$QCOW2_IMG"
+    sudo xz -T 0 --verbose "$VMDK_IMG"
 fi
 
 colorecho "$GREEN" "All images created:"