I would like to preface with the fact that I have played this game for around 60 hours on multiplayer. I would say my assessment of multiplayer is pretty accurate. Multiplayer PVP has several problems, and I think they can be solved with a faction-only mode. Essentially, like the classic fps games, you join the server and you get a screen to select which faction you're in.
It's not at all the problem that PvP is bad and every player is hostile or some petty complaining like that. Players don't want to interact with others, there's almost no multiplayer. As everyone is a potential hostile, there's no meaningful engagement leading to entire servers having players isolated, reducing the multiplayer to a single-player-with-a-chat. You make a character. You show up on the chat asking for a group, and you never find one. Players only engage with their friends and if their friends log-out they engage with nobody. This is no minor issue, after more than 60 hours of gameplay I barely could interact with players.
A faction-only mode where the character selects a team at spawn would fix this as it would allow safe player interactions. What if you're playing with your friends and they all log out? What do you do? Don't worry, you'll have around 50% of the server on your team to interact and help. What happens when the faction leader logs out? No more new recruits. With two fixed teams this would not be a problem.
Here's somewhat of an enumeration of the problems it would solve:
Everyone gets a group right at character creation. People can create characters to be more pro-social and passive without worrying about this.
Nope, everyone would train themselves to do their own plumbing, which is exactly what happens. But if people are matched with you from character creation and can't kill you, you might actually seek exchanges of services, like calling for the faction's mechanic. The "no pvp zone" everyone asks for? No need, problem solved.
You might get a purpose right off the spawn. You can be the settler that unites your team or know the city your team is at which you need to secure and exchange intel on potential invaders.
This happened to me, this is a problem that can happen in other games as well, the guy who creates the group first holds all the power just for doing it first. With fixed factions this wouldn't be an issue; the leaders are whoever rise to the occasion and want to do stuff.
This can be done on the vanilla game mode, without drastically altering the player's freedom, or it can be more heavily tailored, for instance, another suggestion would be to limit the map. Multiplayer is about interacting with people, a single city is large enough for a whole server. So two factions with a spawn building each in a single city would be a lot nicer than the current vanilla. Two factions on a Louisville-only map would be sick. Maybe even have character classes presets to select and a specific starting building for each team.