diff --git a/packages/backend/src/managers/applicationManager.spec.ts b/packages/backend/src/managers/applicationManager.spec.ts
index 04321edd4..fe835be8a 100644
--- a/packages/backend/src/managers/applicationManager.spec.ts
+++ b/packages/backend/src/managers/applicationManager.spec.ts
@@ -1,4 +1,4 @@
-import { expect, test, vi } from 'vitest';
+import { type MockInstance, describe, expect, test, vi, beforeEach } from 'vitest';
 import { ApplicationManager } from './applicationManager';
 import type { RecipeStatusRegistry } from '../registries/RecipeStatusRegistry';
 import type { ExtensionContext } from '@podman-desktop/api';
@@ -8,10 +8,13 @@ import fs, { Stats, type Dirent } from 'fs';
 import path from 'path';
 import type { Recipe } from '@shared/src/models/IRecipe';
 import type { ModelInfo } from '@shared/src/models/IModelInfo';
+import type { LocalModelInfo } from '@shared/src/models/ILocalModelInfo';
+import type { RecipeStatusUtils } from '../utils/recipeStatusUtils';
 
 const mocks = vi.hoisted(() => {
   return {
     parseYamlMock: vi.fn(),
+    builImageMock: vi.fn(),
   };
 });
 
@@ -19,6 +22,16 @@ vi.mock('../models/AIConfig', () => ({
   parseYaml: mocks.parseYamlMock,
 }));
 
+vi.mock('@podman-desktop/api', () => ({
+  containerEngine: {
+    buildImage: mocks.builImageMock,
+  },
+}));
+
+beforeEach(() => {
+  vi.resetAllMocks();
+});
+
 test('appUserDirectory should be under home directory', () => {
   vi.spyOn(os, 'homedir').mockReturnValue('/home/user');
   const manager = new ApplicationManager({} as GitManager, {} as RecipeStatusRegistry, {} as ExtensionContext);
@@ -71,76 +84,175 @@ test('getLocalModels should return models in local directory', () => {
   ]);
 });
 
-test('pullApplication should clone repository and call downloadModelMain', async () => {
+describe('pullApplication', () => {
+  interface mockForPullApplicationOptions {
+    recipeFolderExists: boolean;
+  }
+
   const setStatusMock = vi.fn();
   const cloneRepositoryMock = vi.fn();
-  vi.spyOn(os, 'homedir').mockReturnValue('/home/user');
-  vi.spyOn(fs, 'mkdirSync').mockReturnValue(undefined);
-  vi.spyOn(fs, 'existsSync').mockImplementation((path: string) => {
-    if (path.endsWith('recipe1')) {
+  let manager: ApplicationManager;
+  let getLocalModelsSpy: MockInstance<[], LocalModelInfo[]>;
+  let downloadModelMainSpy: MockInstance<
+    [modelId: string, url: string, taskUtil: RecipeStatusUtils, destFileName?: string],
+    Promise<string>
+  >;
+
+  function mockForPullApplication(options: mockForPullApplicationOptions) {
+    vi.spyOn(os, 'homedir').mockReturnValue('/home/user');
+    vi.spyOn(fs, 'mkdirSync').mockReturnValue(undefined);
+    vi.spyOn(fs, 'existsSync').mockImplementation((path: string) => {
+      if (path.endsWith('recipe1')) {
+        return options.recipeFolderExists;
+      } else if (path.endsWith('ai-studio.yaml')) {
+        return true;
+      } else if (path.endsWith('contextdir1')) {
+        return true;
+      }
       return false;
-    } else if (path.endsWith('ai-studio.yaml')) {
-      return true;
-    }
-    return false;
-  });
-  vi.spyOn(fs, 'statSync').mockImplementation((path: string) => {
-    if (path.endsWith('recipe1')) {
-      const stat = new Stats();
-      stat.isDirectory = () => true;
-      return stat;
-    } else if (path.endsWith('ai-studio.yaml')) {
-      const stat = new Stats();
-      stat.isDirectory = () => false;
-      return stat;
+    });
+    vi.spyOn(fs, 'statSync').mockImplementation((path: string) => {
+      if (path.endsWith('recipe1')) {
+        const stat = new Stats();
+        stat.isDirectory = () => true;
+        return stat;
+      } else if (path.endsWith('ai-studio.yaml')) {
+        const stat = new Stats();
+        stat.isDirectory = () => false;
+        return stat;
+      }
+    });
+    vi.spyOn(fs, 'readFileSync').mockImplementation((_path: string) => {
+      return '';
+    });
+    mocks.parseYamlMock.mockReturnValue({
+      application: {
+        containers: [
+          {
+            name: 'container1',
+            contextdir: 'contextdir1',
+            containerfile: 'Containerfile',
+          },
+        ],
+      },
+    });
+    mocks.builImageMock.mockResolvedValue(undefined);
+
+    manager = new ApplicationManager(
+      {
+        cloneRepository: cloneRepositoryMock,
+      } as unknown as GitManager,
+      {
+        setStatus: setStatusMock,
+      } as unknown as RecipeStatusRegistry,
+      {} as ExtensionContext,
+    );
+
+    getLocalModelsSpy = vi.spyOn(manager, 'getLocalModels');
+    downloadModelMainSpy = vi.spyOn(manager, 'downloadModelMain');
+    downloadModelMainSpy.mockResolvedValue('');
+  }
+
+  test('pullApplication should clone repository and call downloadModelMain and buildImage', async () => {
+    mockForPullApplication({
+      recipeFolderExists: false,
+    });
+    getLocalModelsSpy.mockReturnValue([]);
+
+    const recipe: Recipe = {
+      id: 'recipe1',
+      name: 'Recipe 1',
+      categories: [],
+      description: '',
+      readme: '',
+      repository: 'repo',
+    };
+    const model: ModelInfo = {
+      id: 'model1',
+      description: '',
+      hw: '',
+      license: '',
+      name: 'Model 1',
+      popularity: 1,
+      registry: '',
+      url: '',
+    };
+
+    await manager.pullApplication(recipe, model);
+    if (process.platform === 'win32') {
+      expect(cloneRepositoryMock).toHaveBeenNthCalledWith(
+        1,
+        'repo',
+        '\\home\\user\\podman-desktop\\ai-studio\\recipe1',
+      );
+    } else {
+      expect(cloneRepositoryMock).toHaveBeenNthCalledWith(1, 'repo', '/home/user/podman-desktop/ai-studio/recipe1');
     }
+    expect(downloadModelMainSpy).toHaveBeenCalledOnce();
+    expect(mocks.builImageMock).toHaveBeenCalledOnce();
   });
-  vi.spyOn(fs, 'readFileSync').mockImplementation((_path: string) => {
-    return '';
+
+  test('pullApplication should not clone repository if folder already exists locally', async () => {
+    mockForPullApplication({
+      recipeFolderExists: true,
+    });
+    getLocalModelsSpy.mockReturnValue([]);
+
+    const recipe: Recipe = {
+      id: 'recipe1',
+      name: 'Recipe 1',
+      categories: [],
+      description: '',
+      readme: '',
+      repository: 'repo',
+    };
+    const model: ModelInfo = {
+      id: 'model1',
+      description: '',
+      hw: '',
+      license: '',
+      name: 'Model 1',
+      popularity: 1,
+      registry: '',
+      url: '',
+    };
+
+    await manager.pullApplication(recipe, model);
+    expect(cloneRepositoryMock).not.toHaveBeenCalled();
   });
-  mocks.parseYamlMock.mockReturnValue({
-    application: {
-      containers: [],
-    },
+
+  test('pullApplication should not download model if already on disk', async () => {
+    mockForPullApplication({
+      recipeFolderExists: true,
+    });
+    getLocalModelsSpy.mockReturnValue([
+      {
+        id: 'model1',
+        file: 'model1.file',
+      },
+    ]);
+
+    const recipe: Recipe = {
+      id: 'recipe1',
+      name: 'Recipe 1',
+      categories: [],
+      description: '',
+      readme: '',
+      repository: 'repo',
+    };
+    const model: ModelInfo = {
+      id: 'model1',
+      description: '',
+      hw: '',
+      license: '',
+      name: 'Model 1',
+      popularity: 1,
+      registry: '',
+      url: '',
+    };
+
+    await manager.pullApplication(recipe, model);
+    expect(cloneRepositoryMock).not.toHaveBeenCalled();
+    expect(downloadModelMainSpy).not.toHaveBeenCalled();
   });
-  const manager = new ApplicationManager(
-    {
-      cloneRepository: cloneRepositoryMock,
-    } as unknown as GitManager,
-    {
-      setStatus: setStatusMock,
-    } as unknown as RecipeStatusRegistry,
-    {} as ExtensionContext,
-  );
-
-  const getLocalModelsSpy = vi.spyOn(manager, 'getLocalModels');
-  getLocalModelsSpy.mockReturnValue([]);
-  const downloadModelMainSpy = vi.spyOn(manager, 'downloadModelMain');
-  downloadModelMainSpy.mockResolvedValue('');
-
-  const recipe: Recipe = {
-    id: 'recipe1',
-    name: 'Recipe 1',
-    categories: [],
-    description: '',
-    readme: '',
-    repository: 'repo',
-  };
-  const model: ModelInfo = {
-    id: 'model1',
-    description: '',
-    hw: '',
-    license: '',
-    name: 'Model 1',
-    popularity: 1,
-    registry: '',
-    url: '',
-  };
-  await manager.pullApplication(recipe, model);
-  if (process.platform === 'win32') {
-    expect(cloneRepositoryMock).toHaveBeenNthCalledWith(1, 'repo', '\\home\\user\\podman-desktop\\ai-studio\\recipe1');
-  } else {
-    expect(cloneRepositoryMock).toHaveBeenNthCalledWith(1, 'repo', '/home/user/podman-desktop/ai-studio/recipe1');
-  }
-  expect(downloadModelMainSpy).toHaveBeenCalledOnce();
 });
diff --git a/packages/backend/vitest.config.js b/packages/backend/vitest.config.js
index 0c675e04b..d86d61da3 100644
--- a/packages/backend/vitest.config.js
+++ b/packages/backend/vitest.config.js
@@ -23,9 +23,13 @@ const PACKAGE_ROOT = __dirname;
 
 const config = {
   test: {
-    include: ['**/*.{test,spec}.?(c|m)[jt]s?(x)', '../shared/**/*.{test,spec}.?(c|m)[jt]s?(x)']
-  },
-  resolve: {
+    include: ['**/*.{test,spec}.?(c|m)[jt]s?(x)', '../shared/**/*.{test,spec}.?(c|m)[jt]s?(x)'],
+    coverage: {
+      provider: 'v8',
+      reporter: ['lcov', 'text'],
+    },
+},
+resolve: {
     alias: {
       '@podman-desktop/api': path.resolve(__dirname, '__mocks__/@podman-desktop/api.js'),
       '/@/': join(PACKAGE_ROOT, 'src') + '/',