firebase-tools: NextJS API Routes not working with Firebase Hosting

[REQUIRED] Environment info

firebase-tools: 12.5.2

Platform: Mac OS

[REQUIRED] Test case

I have a simple NextJS Project using pages router with one single API endpoint in the src/pages/api folder. The API endpoint works correctly locally, but after deploying to firebase hosting it gives error, with not much info but it is either status code 500 or 408 (timeout)

Code:

Component code:

      <Button
        onClick={async () => {
          try {
            fetch("api/mixpanel/track", {
              method: "POST",
              headers: {
                "Content-Type": "application/json",
              },
              body: JSON.stringify({
                event: "<EVENT_NAME>",
              }),
            })
              .then((res) => {})
              .catch((err) => {
                captureException(err); // I have enabled Sentry but for some reason those longs also don't appear, but lets ignore that mostly a Sentry issue
              });
          } catch (error: any) {
            Logger.log(error.toString()); // custom logging util which is configured to only work with localhost
          }
        }}
      >
        Track event
      </Button>

API code: src/pages/api/mixpanel/track.ts

import { NextApiRequest, NextApiResponse } from "next";

import { Logger } from "@utils/logger";
import mixpanel from "@utils/mixpanel";

export default function handler(req: NextApiRequest, res: NextApiResponse) {
  if (req.method === "POST") {
    const event = req.body.event;
    const properties = req.body.properties;

    try {
      if (properties) {
        mixpanel.track(event, properties);
      } else {
        mixpanel.track(event);
      }
      return res.status(200).json({
        message: "Success",
      });
    } catch (e) {
      Logger.log("NextJS Server error: unable to track mixpanel");
      return res.status(500).json({
        message: "NextJS Server error: unable to track mixpanel",
      });
    }
  }
}

[REQUIRED] Steps to reproduce

Deploy NextJS project with API routes to firebase hosting

[REQUIRED] Expected behavior

API route working correctly.

[REQUIRED] Actual behavior

Errors with status codes 408 or 500 (no specificity in these either, which will occur is random, but it does not work is the main thing)