I am an idiot. I missed the part that when automating, you add that option to the open command.
I am using %WinSCPcom% /ini=nul /script=%temp%\sftpcommands.bat -hostkey=*
I get back:
Expected host key was not configured, use -hostkey switch.
Host key fingerprint is ssh-ed25519 256 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX=.
I am using WinSCP version 5.13.4