diff --git a/dvc/dependency/repo.py b/dvc/dependency/repo.py
index 3bcfd3e65d..66c8b278fc 100644
--- a/dvc/dependency/repo.py
+++ b/dvc/dependency/repo.py
@@ -142,5 +142,10 @@ def download(self, to):
             )
 
     def update(self):
-        with self._make_repo(rev_lock=None) as repo:
-            self.def_repo[self.PARAM_REV_LOCK] = repo.scm.get_rev()
+        try:
+            with self._make_repo(rev_lock=None) as repo:
+                rev = repo.scm.get_rev()
+        except NotDvcRepoError:
+            clone_path = cached_clone(**self.def_repo)
+            rev = SCM(clone_path).get_rev()
+        self.def_repo[self.PARAM_REV_LOCK] = rev
diff --git a/tests/dir_helpers.py b/tests/dir_helpers.py
index c531e4b8cc..a108d5b285 100644
--- a/tests/dir_helpers.py
+++ b/tests/dir_helpers.py
@@ -54,7 +54,15 @@
 from dvc.compat import fspath, fspath_py35
 
 
-__all__ = ["tmp_dir", "scm", "dvc", "repo_template", "run_copy", "erepo_dir"]
+__all__ = [
+    "tmp_dir",
+    "scm",
+    "dvc",
+    "repo_template",
+    "run_copy",
+    "erepo_dir",
+    "external_git_dir",
+]
 REPO_TEMPLATE = {
     "foo": "foo",
     "bar": "bar",
@@ -285,3 +293,21 @@ def erepo_dir(tmp_path_factory, monkeypatch):
         path.dvc.close()
 
     return path
+
+
+@pytest.fixture
+def external_git_dir(tmp_path_factory, monkeypatch):
+    from dvc.scm.git import Git
+
+    path = TmpDir(fspath_py35(tmp_path_factory.mktemp("external_git_dir")))
+
+    # Create git repo
+    with path.chdir():
+        _git_init()
+
+    try:
+        path.scm = Git(fspath(path))
+        path.scm.commit("initial commit to create the master branch")
+        yield path
+    finally:
+        path.scm.close()
diff --git a/tests/func/test_status.py b/tests/func/test_status.py
index 8b8d3d2ba9..b9bca28a34 100644
--- a/tests/func/test_status.py
+++ b/tests/func/test_status.py
@@ -61,27 +61,25 @@ def test_status_non_dvc_repo_import(tmp_dir, dvc, erepo_dir):
     }
 
 
-def test_status_before_and_after_dvc_init(tmp_dir, dvc, erepo_dir):
-    with erepo_dir.chdir():
-        erepo_dir.scm.repo.index.remove([".dvc"], r=True)
-        shutil.rmtree(".dvc")
-        erepo_dir.scm_gen("file", "first version")
-        erepo_dir.scm.add(["file"])
-        erepo_dir.scm.commit("first version")
-        old_rev = erepo_dir.scm.get_rev()
+def test_status_before_and_after_dvc_init(tmp_dir, dvc, external_git_dir):
+    with external_git_dir.chdir():
+        external_git_dir.scm_gen(
+            "file", "first version", commit="first version"
+        )
+        old_rev = external_git_dir.scm.get_rev()
 
-    dvc.imp(fspath(erepo_dir), "file", "file")
+    dvc.imp(fspath(external_git_dir), "file", "file")
 
     assert dvc.status(["file.dvc"]) == {}
 
-    with erepo_dir.chdir():
-        Repo.init()
-        erepo_dir.scm.repo.index.remove(["file"])
+    with external_git_dir.chdir():
+        external_git_dir.dvc = Repo.init()
+        external_git_dir.scm.repo.index.remove(["file"])
         os.remove("file")
-        erepo_dir.dvc_gen("file", "second version")
-        erepo_dir.scm.add([".dvc", "file.dvc"])
-        erepo_dir.scm.commit("version with dvc")
-        new_rev = erepo_dir.scm.get_rev()
+        external_git_dir.dvc_gen("file", "second version")
+        external_git_dir.scm.add([".dvc", "file.dvc"])
+        external_git_dir.scm.commit("version with dvc")
+        new_rev = external_git_dir.scm.get_rev()
 
     assert old_rev != new_rev
 
@@ -93,6 +91,6 @@ def test_status_before_and_after_dvc_init(tmp_dir, dvc, erepo_dir):
 
     assert status == {
         "changed deps": {
-            "file ({})".format(fspath(erepo_dir)): "update available"
+            "file ({})".format(fspath(external_git_dir)): "update available"
         }
     }
diff --git a/tests/func/test_update.py b/tests/func/test_update.py
index 6f483fff0a..4e846a2bb2 100644
--- a/tests/func/test_update.py
+++ b/tests/func/test_update.py
@@ -172,3 +172,28 @@ def test_update_import_url(tmp_dir, dvc, tmp_path_factory):
 
     assert dst.is_file()
     assert dst.read_text() == "updated file content"
+
+
+def test_update_git_tracked(tmp_dir, dvc, external_git_dir):
+    with external_git_dir.chdir():
+        external_git_dir.scm_gen("file", "first version", commit="create")
+
+    tmp_dir.dvc.imp(fspath(external_git_dir), "file", "file")
+
+    # Just to make sure it doesn't crash
+    tmp_dir.dvc.update("file.dvc")
+
+    assert (tmp_dir / "file").read_text() == "first version"
+
+    with external_git_dir.chdir():
+        external_git_dir.scm_gen(
+            "file", "second version", commit="update file"
+        )
+
+    # Caching in external repos doesn't see upstream updates within single
+    # cli call, so we need to clean the caches to see the changes.
+    clean_repos()
+
+    tmp_dir.dvc.update("file.dvc")
+
+    assert (tmp_dir / "file").read_text() == "second version"