In another post, someone theorized the the Casualty tresholds do affect troops in the field as well.ORIGINAL: Soar_Slitherine
The AI major I'm fighting in my ongoing game certainly looks like it's having morale issues. Scouting reports claim that their recently recruited heavy tank regiments have only 35-ish morale, which is getting close to the threshold for capitulation, and I don't think those have been in any combat yet. They initially tried to attack me with masses of infantry with no anti-tank weapons of any sort through a chokepoint, and I've been mowing them down with artillery and tanks while waiting to get all the hardware together for my own offensive, so the AI has taken a lot of casualties.
EDIT: Grammar.
We know for certain it affects cities (given that there is a UI view for it), but if it affects the Troops is a open question.

