1. Serverless Architecture: Vercel is optimized for serverless deployments, which means each request is handled by a serverless function. Templating engines like Handlebars and EJS are typically used in server-based applications where the server renders HTML pages dynamically. In a serverless environment, the conventional setup of these templating engines might not align with the stateless and ephemeral nature of serverless functions.
2. Path Resolution Issues: In serverless functions, the file system behaves differently compared to a traditional server. The file paths used in your local development environment might not correctly resolve in a serverless environment. This can lead to errors where the templating engine cannot find the template files 2.
3. Deployment Configuration: Vercel requires specific configurations for projects, especially when dealing with static files and serverless functions. If the configuration does not explicitly handle the routing and serving of static assets or views, the templating engine might fail to locate these files 3.

1. Correct File Path Configuration: Ensure that the paths to your templates are correctly configured to reflect the structure of the deployed environment on Vercel. You might need to use absolute paths or configure your templating setup to adapt to the serverless environment.

   1const path = require('path');
   2app.set('views', path.join(__dirname, 'views'));

2. Custom Server Setup: For applications that heavily rely on server-side rendering with templating engines, consider using a custom server setup on Vercel, such as an Express.js server. This allows more traditional handling of routes and file serving, which can be configured to work with templating engines.

   1const express = require('express');
   2const app = express();
   3app.set('view engine', 'ejs');
   4// Setup other middleware and routes
   5module.exports = app;

3. Static Site Generation (SSG): If possible, consider pre-rendering your pages at build time using Static Site Generation techniques. This approach is well-suited for serverless platforms like Vercel and can improve performance by serving static HTML files instead of rendering them on-the-fly.
4. Debugging and Logs: Utilize Vercel's deployment logs to identify and troubleshoot issues related to file paths or configuration problems. Adjustments based on the logs can often resolve issues with templating engines.

By understanding these limitations and configuring your deployment appropriately, you can effectively use templating engines like Handlebars and EJS on Vercel. It's crucial to adapt your application's architecture and deployment strategy to fit the serverless model that Vercel supports.