<p>Modelling complex manufacturing processes presents significant challenges related to accuracy and explainability. Physics-based models, while interpretable and generalizable, often suffer from reduced accuracy due to simplifications and incomplete system understanding. On the other hand, purely data-driven models are typically more accurate but lack transparency, limiting their trust and adoption in critical manufacturing applications. Existing hybrid approaches attempt to address these issues but often retain black-box AI components that compromise interpretability. In this study, we propose a novel hybrid modelling framework that intrinsically integrates physics-based models with explainable AI, to correct for modelling inaccuracies. This approach offers both high accuracy and transparent, traceable decision-making. Its effectiveness is demonstrated through a case study predicting the real-time position of cutting tools from accelerometer signals during ultra-precision diamond turning.</p>