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Cut the potatoes and onion into large chunks, then grate them with the grating disk of a food processor. Transfer them to a strainer set over a large bowl, and drain for 10 minutes, occasionally pressing down on the vegetables to squeeze out their liquid.
Gently pour off and discard the potato water, leaving the potatoes’ starch in the bottom of the bowl. Transfer the grated vegetables to the bowl, and add the eggs, flour, mashed-potato granules, salt, baking powder, and pepper. Stir to combine.
Put ½ inch of olive oil in a large pot over medium-high heat. (The volume will vary depending on the diameter of your pot.) When it seems hot, add a spoonful of the potato mixture; it should sizzle immediately. Working in batches, add the potato mixture ¼ cup at a time, flattening each mound into a thin disk. Cook the latkes until golden brown, 2 to 3 minutes per side, then drain them on paper towels. Serve hot, garnished with the sour cream and applesauce.