For me elephants are used mainly to lower the moral of the enemy. I have used elephants in RTW but not in MTW2. The problems I have found with elephants is that they will go rouge on you too easy. since they are intelligent animals they have a sense of survival that is evident in the game. if a group of elephants are engaged in battle for an extended period of time they will go rouge, become uncontrollable and stomp/kill all that surround them friend or foe. I use elephants to turn the tide of battle to shock the opponents troops into routing.
to keep elephants off of your troops, concentrate all of your archers into attacking the elephants with flaming arrows. if you have horse archers or archer chariots have them attack the elephants also. after a few minutes of having flaming arrows shot into them the elephants will go rouge.
therefore is you plan on using elephants then leave them visible to the enemy troops to frighten them. make some false charges at the enemy to heighten the fear factor. the timing of the elephant charge is critical, when you time the charge correctly as soon as you see the elephants hit you opponent and their troops start flying in the air the rest will rout/run away. do not use your elephants to chase down the enemy troops use a light cav unit. so basically keep the elephants near the battle but always in the middle of the fight and then use them to break the back of your opponent.
also in RTW an elephant can be used as a battering ram to break through a wooden wall.
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