While the Italian tanks were obsolete by the time American forces arrived in the war, during the early stages (1939-1941) they were actually comparable to the British and German tanks of the day.
The M11/39 and M14/41 were both on the lighter side of medium tanks, but armed with a 47mm (heavier than the 3.7cm Main gun of the early panzer IIIs, and similar to the 5cm Weapon on later models (the Panzer III J to M)).
The M14/41 could hold its own against Crusaders IIs (40mm gun) and (to some extent, IIIs, with their 57mm weapon), which were their main opponent until the US lend-lease tanks began arriving in large numbers. And even then the serious draw backs of the Grant - hull mounted weapons were of little use in the desert, as you had to expose yourself to return fire more than a tank with turret mounted weapons could (even the Italians learnt this lesson before the Yanks) - allowed the M14/41 to compete with them, albeit with serious disadvantages in terms of main armourment and armour.
The Italians problem was that they didn’t keep upgrading their tanks. When compared to a Panzer II or III, or a Crusader II the M14/41 was a decent tank. However, it was outclassed by tanks from 1942 and later. Compared to a Sherman, Panzer IV or T-34 it is pathetically under-armoured and under-equipt.
But how could you represent this in A&A? The Italians get normal tanks for the first few turns, then start paying less and get weaker ones once the US joins in? Or ingnore the bits of the war before the Torch Landings?
Plus, A&A is not meant to follow history exactly. What if the Italians had put more effort into the P40, with its 75mm gun? Or if they had been Lend-Leased Panzer IVs by their Allies, and relied on foreign-produced tanks like the British?