@eternalvigil: Hmmm, I don't quite know, as I have not tried to go for that achievement myself yet. Definitely wouldn't do it on ironman :P
If I had to go for the 4 man squad thing (which now I think i might try at some point) i might go the direction of trying to make most or all of them into MECs. It's a min/max type of situation. If you are limited on squad slots, you spend less on gearing them up. You can then also completely forgo biogenetics, saving money and meld for mechs. It also means that your entire squad will have more HP per person. If your entire squad is MECs instead of 1 or 2 then the concentrated damge to them becomes less of an issue, as they all don't use cover. You can then also combo their upgrades nicely. For example, give everyone fists, this will give you supreme mobility (especially in mid-late game with servo upgrade) as well as having 4 MECs with fists means 4 x guaranteed 12 point damage strikes, which becomes 18 with a later upgrade that can one shot Muton Elites on classic (that's 72 points of 100% hitting damage potential). Then 2 of them have restorative mist like you mentioned, the other 2 have grenade upgrades, that is 4 total long range aoe damage abilities per mission with cover stripping, which for a 4 man squad is super nice and helps with their shit aim. For the last upgrade give everyone of them the electric pulse, with fists and upgraded servos this can be deployed reliably where you want it and having 4 of them means you can completely shutdown all enemy mechanical enemies. You can then also min/max their classes and rank skills, all of them get the repair ability (or extra storage on grenade/medkit dudes if you want), the make a MEC into heavy cover becomes useless so all get jetboots. I would have to think more about the first and last MEC class ability choice in this situation.
You can also lookup the post i made earlier on how they upgrade. Keeping that post in mind, I would upgrade a heavy first, then try to upgrade assaults, and finally corporal snipers (for the massive aim boost) into MECs, you can forget supports as the defense to cover would be wasted.
The only 2 issues I see with this setup are: you need a dude to carry an Arc to capture aliens, but you will convert dudes gradually to MECs anyway so, by the time you get a full MEC squad most of the interrogations except the late game ones can be done, then substitute 1 squishy into the squad each time a new type shows up. Secondly you need a psionic meatbag, this can be solved by making any of the 4 DLC characters into one, just leveling them up and then only using 1 on the final mission.
Finally you can cheese an all MEC squad with second wave options a bit. Aiming Angles would affect the aliens negatively but not you since MECs don't use cover, Absolutely Critical would likewise only really affect enemies that use cover, not MECs (well +10%, but that's peanuts).
Anyway this is how I would do it, as it seems an interesting way to try. This is all theory however and might fail horribly. :D
In your case, since you are already in progress of a game, maybe try converting 1 more dude into a MEC to have 3 in a squad and 1 psionic. Also if you are going to use 2 with restorative mists you can ditch the meat bag support and take something that can destroy offensively like assault/heavy/sniper, you can really go with any combination of them. MEC suit abilities i recommend to take is always fist first, flamethrower is nice at the start of the game but later on it doesn't do enough damage and a lot of enemies become immune to panic, a fist is not only a shitload of single target damage it is a mobility boost, which is super fucking nice. Second tier it's a tossup, I recommend having both restorative mist on one and a grenade launcher on the second, if you plan to include a 3rd MEC either go restorative mist, to then not need a support, or another grenade launcher and you an then not take a heavy. Final ability should always be electric pulse, imo it's no contest, you fight a shitload of mechanical enemies in the second half of the game, and an AoE disable on all of your MECs is sic!, mines can be nice but they have RNG and are situational, electric pulse is not. With electric pulse + upgraded rocket fist on 2-3 MECs you can handle almost any enemy: one shot anything up to muton elites in hp and shutdown cyberdiscs/sectoid MECs/sectopods and have an insane movement range. -> Mindcontrol is not a big deal with fist + upgraded servos, you can be an asshole and punch those psionic nerds to death in one move. For any dude on your squad that isn't a MEC have ghost armor, it still remains an objectively better defensive choice then titan and you can stealth the most squishy dude in the squad if needed. (psionic armor when needed obv.)
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