If your vehicle uses rgb lights, you will have to use STEAMCMD to update thumbnails because rgb lights cause a thumbnail update. (thanks xcinos!)


The first step is to get a thumbnail image.
From my testing the image must be 512x512, and with a .png file extension.
Next, navigate to
C:\Program Files (x86)\Steam\userdata\(your user id here)\remote\573090\remote
(or the location of your 573090 folder if your steam install is different)
Once there you should see a folder containing all/most of your workshop thumbnails.

The next step is to upload the creation (we all know how to do this so i won't bore you.)

Once your creation is uploaded, you should see a new thumbnail image in the folder opened previously. Replace this with your desired thumbnail.

Make sure not to change the creation between uploads so the game does not overwrite your thumbnail.

Once the thumbnail has been replaced, update your creation ingame.
In a few seconds it should push the update and use the custom thumbnail.

Note: if you are getting the "failed to update your workshop creation" error, you are likely using a .jpg, if you aren't, but are still getting the error, please let me know.

You can also change thumbnails through steamcmd, guide linked here. (the guide is mainly for gifs but it works fine with pngs)
https://steamproxy.com/sharedfiles/filedetails/?id=1625228285

With this information you should now be able to do custom thumbnails, good luck.
Credit to Krail for discovering the original method.
(I will not share as i do not have their permission at this time..)

(guide updated as read only files are no longer required.)