diff --git a/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup.go b/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup.go
index ef1f2545b4ab..4fa942e2ab01 100644
--- a/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup.go
+++ b/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup.go
@@ -370,9 +370,9 @@ func newNodeGroupFromScalableResource(controller *machineController, unstructure
 		return nil, err
 	}
 
-	// We don't scale from 0 so nodes must belong to a nodegroup
-	// that has a scale size of at least 1.
-	if found && replicas == 0 {
+	// Ensure that if the nodegroup has 0 replicas it is capable
+	// of scaling before adding it.
+	if found && replicas == 0 && !scalableResource.CanScaleFromZero() {
 		return nil, nil
 	}
 
diff --git a/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup_test.go b/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup_test.go
index fcc2eee231a0..fcfb2b3ceea6 100644
--- a/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup_test.go
+++ b/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_nodegroup_test.go
@@ -1210,7 +1210,7 @@ func TestNodeGroupTemplateNodeInfo(t *testing.T) {
 	for _, tc := range testCases {
 		t.Run(tc.name, func(t *testing.T) {
 			t.Run("MachineSet", func(t *testing.T) {
-				test(t, createMachineSetTestConfig(testNamespace, RandomString(6), 10, cloudprovider.JoinStringMaps(enableScaleAnnotations, tc.nodeGroupAnnotations)),
+				test(t, createMachineSetTestConfig(testNamespace, RandomString(6), RandomString(6), 10, cloudprovider.JoinStringMaps(enableScaleAnnotations, tc.nodeGroupAnnotations)),
 					tc.config,
 				)
 			})
@@ -1218,7 +1218,7 @@ func TestNodeGroupTemplateNodeInfo(t *testing.T) {
 			t.Run("MachineDeployment", func(t *testing.T) {
 				test(
 					t,
-					createMachineDeploymentTestConfig(testNamespace, RandomString(6), 10, cloudprovider.JoinStringMaps(enableScaleAnnotations, tc.nodeGroupAnnotations)),
+					createMachineDeploymentTestConfig(testNamespace, RandomString(6), RandomString(6), 10, cloudprovider.JoinStringMaps(enableScaleAnnotations, tc.nodeGroupAnnotations)),
 					tc.config,
 				)
 			})
diff --git a/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_utils.go b/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_utils.go
index 6a160401c4af..c4cbed381368 100644
--- a/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_utils.go
+++ b/cluster-autoscaler/cloudprovider/clusterapi/clusterapi_utils.go
@@ -31,7 +31,7 @@ import (
 const (
 	nodeGroupMinSizeAnnotationKey = "machine.openshift.io/cluster-api-autoscaler-node-group-min-size"
 	nodeGroupMaxSizeAnnotationKey = "machine.openshift.io/cluster-api-autoscaler-node-group-max-size"
-	clusterNameLabel              = "cluster.x-k8s.io/cluster-name"
+	clusterNameLabel              = "machine.openshift.io/cluster-name"
 	deprecatedClusterNameLabel    = "cluster.k8s.io/cluster-name"
 
 	cpuKey     = "machine.openshift.io/vCPU"