When using a custom webpack setup with Vue 3 composition API, the output bundle is very large

So as it says in the title, when bundling Vue 3 using the composition API with webpack, the bundle file is very large. So first off some information about my setup:

webpack.config.js

const path = require("path");
const { VueLoaderPlugin } = require("vue-loader");

module.exports = (env) => {
  return {
  entry: "./src/index.ts",
  mode: env.production ? "production" : "developent",
  output: {
    filename: "index.js",
    path: path.resolve(__dirname, "dist"),
    library: {
      name: "Guide",
      type: "umd",
    },
    clean: true,
  },
  module: {
    rules: [
      {
        test: /\.tsx?$/,
        loader: "ts-loader",
        options: {
          appendTsSuffixTo: [/\.vue$/],
        },
        exclude: /node_modules/,
      },
      {
        test: /\.vue$/,
        loader: "vue-loader",
      },
      {
        test: /\.css$/i,
        use: ["style-loader", "css-loader", "postcss-loader"],
      },
    ],
  },
  resolve: {
    extensions: [".ts", ".tsx", ".js"],
  },
  plugins: [new VueLoaderPlugin()],
};
};

My package.json has a build script which looks like this:

cross-env NODE_ENV=production webpack --env production

cross-env - a way to set environment variables cross-platform

Not sure if it's relevant, but here is my tsconfig.json file:

tsconfig.json

{
  "compilerOptions": {
    "target": "ES5",
    "module": "CommonJS",
    "lib": ["DOM", "ES2020"],
    "outDir": "dist",
    "esModuleInterop": true,
    "sourceMap": false,
    "declaration": true,
    "skipLibCheck": true
  }
}

Now, after running the build script, I notice something odd in the output as seen here:

    modules by path ./node_modules/@vue/ 633 KiB 3 modules
    modules by path ./node_modules/vue/ 2.26 KiB 2 modules
    modules by path ./node_modules/css-loader/dist/runtime/*.js 2.33 KiB 2 modules

As you can see, @vue is 633kb which is beyond crazy. And when I inspect the actual bundle file, I have all sorts of artefacts that definitely shouldn't be there. There's objects that have properties which have links to the Vue documentation. I'm clearly importing the wrong thing somewhere, but I can't figure it out.

EDIT

It seems that the vue compiler is being bundled as well which is what's causing the bloat. I can't quite figure out how to get rid of it though.