I tried playing the game with mouse, but it was extremely sluggish despite all the animations playing fine. I went to the SETTINGS menu and saw that the button MOUSE&KB and GAMEPAD rapidly flashes between the two options whenever I move my mouse and then settles to GAMEPAD when I stop moving the mouse.

I have unplugged my HOTAS and my XBox controller and the issue persisted. I do have a virtual joystick (https://www.xedocproject.com/joystickcurves.html) installed and I am not willing to uninstall that (this stuff is a massive pain to configure), but it shouldn't be sending any inputs with the physical HOTAS installed.

This is definitely some kind of bug in Humankind, I play dozens of other games with both mouse and controller support without any issues. There should at the very least be an option to disable the autodetection.