Generally speaking, you can upgrade your unit in three ways: level up, unit evolution and upgrade C.A.P.

Level Up

You can get experience when combat with the enemies. The more enemies you kill, the more experience you will get. When your EXP bar reaches 100%, your unit will be level up.

Unit Evolution       

There are 3 Evolution Engineers on the Steel Warship. Whenever your unit reaches level 20, level 60 and level 100, you can get unit evolution. After evolution, your unit will be much more powerful with a completely different appearance. What's more, you'll have a bigger inner cabin, which means it can hold more inner gears, such as engine, cabin, shield and core.

Upgrade C.A.P.

C.A.P. system is one of Zero's features.
All units above level 130 can upgrade their C.A.P. to level up all the attributes. Upgrading C.A.P. will cost some Rose Quartz or Sappires, which you can get from some enemies when they are killed.