diff --git a/cli/cmd/utils.go b/cli/cmd/utils.go
index ff7455566..503d8d43a 100644
--- a/cli/cmd/utils.go
+++ b/cli/cmd/utils.go
@@ -29,6 +29,11 @@ import (
 	"github.com/kinvolk/lokomotive/pkg/platform"
 )
 
+const (
+	kubeconfigEnvVariable = "KUBECONFIG"
+	defaultKubeconfigPath = "~/.kube/config"
+)
+
 // getConfiguredBackend loads a backend from the given configuration file.
 func getConfiguredBackend(lokoConfig *config.Config) (backend.Backend, hcl.Diagnostics) {
 	if lokoConfig.RootConfig.Backend == nil {
@@ -101,10 +106,11 @@ func expandKubeconfigPath(path string) string {
 	return path
 }
 
-// getKubeconfig finds the kubeconfig to be used. Precedence takes a specified
-// flag or environment variable. Then the asset directory of the cluster is searched
-// and finally the global default value is used. This cannot be done in Viper
-// because we need the other values from Viper to find the asset directory.
+// getKubeconfig finds the kubeconfig to be used. The preference is following:
+// - --kubeconfig-file flag OR KUBECONFIG_FILE environent variable
+// - asset directory from cluster configuration
+// - KUBECONFIG environment variable
+// - ~/.kube/config path, which is kubectl default one
 func getKubeconfig() (string, error) {
 	kubeconfig := viper.GetString(kubeconfigFlag)
 	if kubeconfig != "" {
@@ -116,11 +122,18 @@ func getKubeconfig() (string, error) {
 		return "", err
 	}
 
-	if assetDir != "" {
-		return expandKubeconfigPath(assetsKubeconfig(assetDir)), nil
+	paths := []string{
+		assetDir,
+		os.Getenv(kubeconfigEnvVariable),
+	}
+
+	for _, path := range paths {
+		if path != "" {
+			return expandKubeconfigPath(path), nil
+		}
 	}
 
-	return expandKubeconfigPath("~/.kube/config"), nil
+	return expandKubeconfigPath(defaultKubeconfigPath), nil
 }
 
 func assetsKubeconfig(assetDir string) string {