Karric wants to share his invention with you. However, the plans get complicated because of the incoming Elves.
New Elven units are marching on Karric's cabin. The enemy will be where you fought in the previous mission. Now the Dwarves have the height advantage. What is more, you receive a new unit - a Mortar (1). This is an unique siege equipment - it must "see" enemies to start shooting. Just have enemies in your range. This unit is extremely useful in this mission.
Elven units are more powerful and more numerous in this mission. Besides Archers and Shadow Warriors, the enemy will use Unicorns (2). These units are durable, have access to a powerful charge, and they can regenerate health points. Riflemen and Mortars should focus their fire on the Unicorns. After that, attack Archers. Leave the infantry for last. Don't move the Mortars. Order the Riflemen to join your army near the teleport (3). This is where the Riflemen will be most useful.
You should also use Karric and Thurvid to slow the enemies down - attack units that are still on the road and those in narrow passages (4). Thanks to creating a "traffic jam", you will face fewer units at the same time. Also, the Elves will stay in your line of fire for a longer period of time. Remember to keep the Mortars behind forests, away from the Elven Archers' reach.