I haven't coded it yet but my intention is to allow swapping of equipment between formation elements so you can re-equip high morale elements.
For example, you build a new formation of 100 Panzer III Ausf Bs, with 100 morale. You also have an existing formation element of 50 Panzer IIIs with 200 morale. You will be able to swap 50 of the Panzer III Ausf Bs in the new formation element with the older model in the elite formation element.
The elite formation still has 200 morale but now has the updated tank, while the new formation has 50 of the older tank and 50 Ausf Bs. Effectively, you are passing on the new tank to the elite crews (although the crew itself is not tracked specifically).