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This isn’t really an issue with RKE2, but rather with Rancher and the CLI. I don’t think it supports creating v2 clusters?

Any suggestion on how I can automate creation of RKE2 downstream cluster for Rancher?

I think the idea is to move away from the custom Rancher API, and towards just directly creating the appropriate Kubernetes resource types using kubectl or another native Kubernetes client. I don’t know that we have an example of doing that though.