I get errors like

Failed to merge submodule XXX (not checked out)

in a multibranch pipeline project I use to automatically merge and build pull requests because it fails to initialize and update submodules automatically. There should be a way to do that by configuration, I think.

As a workaround I had to add a git hook to do it on each checkout (feel free to use it if you need):

mkdir -p ~/.git-templates/hooks
git config --global init.templatedir '~/.git-templates'
echo -e '#!/bin/sh\ngit submodule update --init --recursive' > ~/.git-templates/hooks/post-checkout

It's definitely not the cleanest solution so I strongly suggest a long-term solution for that.