error on installing grub in a UEFI xen guest: " File system `fat' doesn't support embedding." & "embedding is not possible, but this is required for cross-disk install." ?

[suse . dev]

I've installed an Arch linux DomU with Grub

In the Guest, my mounts are

 LABEL=EFI   ->  /boot/efi vfat, boot flag
 LABEL=BOOT  ->  /boot     ext4
 LABEL=ROOT  ->  /         ext4
 LABEL=SWAP  ->  swap      swap

My device map is

 cat /boot/grub/device.map
  (hd0) /dev/disk/by-label/EFI
  (hd1) /dev/disk/by-label/BOOT
  (hd2) /dev/disk/by-label/SWAP
  (hd3) /dev/disk/by-label/ROOT

I installed the packages

 grub
 dosfstools
 efibootmgr
 os-prober
 mtools

When I exec

 grub-install --boot-directory=/boot --efi-directory=/boot/efi 
/dev/disk/by-label/EFI

it returns a warning & an error
        Installing for i386-pc platform.

        grub-install: warning: File system `fat' doesn't support embedding.
        grub-install: error: embedding is not possible, but this is required 
for cross-disk install.

Iiuc, EFI sys partition has to be 'fat', and the rest are ext4.

What's wrong with my config, or install/usage of Grib in the Xen guest?