The Italians were not bad fighters at all; they gave good account of themselves on several occasions during the NA campaign in spite of their very poor weaponry. Like every other army, there were good formations and poor ones. In the Italian army it seemed that the formations tended to be extreme in this regard; they either fought with great valor or crumbled with little or no fight. I have read accounts of German troops breaking during combat while the Italians next to them held their ground to the last man.
It’s true that the Italians did not care for the conflict but that doesn’t mean they weren’t willing to fight. They fought out of duty, not for nationalism (the common soldier was typically not a hard-core fascist). Most had little love for Germany and disliked being treated like the little brother in the alliance, but the general viewpoint was to “win this war now, and settle accounts later”.
Their war plans were for a war in the Alps and Balkans. They expected to “hold on the defensive” in Libya and the army was built with this in mind. (It is one reason their tanks were so small; they had to be able to fit through mountainous terrain). The army in Africa was given short shrift early on; the generals told Mussolini it was not fit for an advance into Egypt but he would not listen.
Their industry was terrible as well and, just as important, it was not controlled by the government. In fact, the companies making the weapons for the armed forces could dictate what would be produced and their main goal was to make money not equip the armed forces adequately.
Leadership was either good or very, very bad. However it, as well as combat performance, improved dramatically once the colonial mindset was discarded and the better formations, such as the Ariete, were sent to Africa.
To my mind, the central reasons for the Italian defeat had nothing to do with “fighting spirit” or the common soldier, but were instead rooted in a regime that was “far more style than substance” and a corrupt and inefficient industry that would have been hard-pressed to adequately supply the army if had been a picture of nationalistic efficiency. Just my thoughts.