diff --git a/examples/webpack-options/.npmrc b/examples/webpack-options/.npmrc
new file mode 100644
index 00000000..43c97e71
--- /dev/null
+++ b/examples/webpack-options/.npmrc
@@ -0,0 +1 @@
+package-lock=false
diff --git a/examples/webpack-options/cypress.json b/examples/webpack-options/cypress.json
new file mode 100644
index 00000000..00824cab
--- /dev/null
+++ b/examples/webpack-options/cypress.json
@@ -0,0 +1,7 @@
+{
+  "fixturesFolder": false,
+  "testFiles": "**/*cy-spec.js",
+  "viewportWidth": 500,
+  "viewportHeight": 500,
+  "experimentalComponentTesting": true
+}
diff --git a/examples/webpack-options/cypress/component/Test.cy-spec.js b/examples/webpack-options/cypress/component/Test.cy-spec.js
new file mode 100644
index 00000000..30f4e451
--- /dev/null
+++ b/examples/webpack-options/cypress/component/Test.cy-spec.js
@@ -0,0 +1,9 @@
+import React from 'react'
+import { mount } from 'cypress-react-unit-test'
+
+describe('components', () => {
+  it('works', () => {
+    mount(<div>Text</div>)
+    cy.contains('Text')
+  })
+})
diff --git a/examples/webpack-options/cypress/integration/cy-spec.js b/examples/webpack-options/cypress/integration/cy-spec.js
new file mode 100644
index 00000000..d815fd54
--- /dev/null
+++ b/examples/webpack-options/cypress/integration/cy-spec.js
@@ -0,0 +1,6 @@
+/// <reference types="cypress" />
+describe('integration spec', () => {
+  it('works', () => {
+    expect(1).to.equal(1)
+  })
+})
diff --git a/examples/webpack-options/cypress/plugins/index.js b/examples/webpack-options/cypress/plugins/index.js
new file mode 100644
index 00000000..43cb056e
--- /dev/null
+++ b/examples/webpack-options/cypress/plugins/index.js
@@ -0,0 +1,9 @@
+// @ts-check
+const webpackPreprocessor = require('@cypress/webpack-preprocessor')
+module.exports = (on, config) => {
+  on(
+    'file:preprocessor',
+    // @ts-ignore
+    webpackPreprocessor(webpackPreprocessor.defaultOptions),
+  )
+}
diff --git a/examples/webpack-options/cypress/support/index.js b/examples/webpack-options/cypress/support/index.js
new file mode 100644
index 00000000..5d9ef5d1
--- /dev/null
+++ b/examples/webpack-options/cypress/support/index.js
@@ -0,0 +1 @@
+require('cypress-react-unit-test/dist/hooks')
diff --git a/examples/webpack-options/package.json b/examples/webpack-options/package.json
new file mode 100644
index 00000000..9a31c8af
--- /dev/null
+++ b/examples/webpack-options/package.json
@@ -0,0 +1,12 @@
+{
+  "name": "example-webpack-options",
+  "description": "Using default Webpack options to transpile simple tests",
+  "private": true,
+  "scripts": {
+    "test": "../../node_modules/.bin/cypress run",
+    "cy:open": "../../node_modules/.bin/cypress open"
+  },
+  "devDependencies": {
+    "cypress-react-unit-test": "file:../.."
+  }
+}
diff --git a/plugins/cra-v3/file-preprocessor.js b/plugins/cra-v3/file-preprocessor.js
index 5f6371ce..11c14f81 100644
--- a/plugins/cra-v3/file-preprocessor.js
+++ b/plugins/cra-v3/file-preprocessor.js
@@ -4,16 +4,13 @@ const findWebpack = require('find-webpack')
 const webpackPreprocessor = require('@cypress/webpack-preprocessor')
 const { addImageRedirect } = require('../utils/add-image-redirect')
 
-const getWebpackOptions = opts => {
+const getWebpackPreprocessorOptions = opts => {
   debug('top level opts %o', opts)
 
   const webpackOptions = findWebpack.getWebpackOptions()
   if (!webpackOptions) {
     console.error('⚠️ Could not find Webpack options, using defaults')
-    return {
-      webpackOptions: webpackPreprocessor.defaultOptions,
-      watchOptions: {},
-    }
+    return webpackPreprocessor.defaultOptions
   }
   debug('webpack options: %o', webpackOptions)
   findWebpack.cleanForCypress(opts, webpackOptions)
@@ -42,7 +39,7 @@ module.exports = config => {
     addFolderToTranspile: config.componentFolder,
     coverage: !coverageIsDisabled,
   }
-  const preprocessorOptions = getWebpackOptions(opts)
+  const preprocessorOptions = getWebpackPreprocessorOptions(opts)
 
   debug('final webpack options %o', preprocessorOptions.webpackOptions)