Mercedes team principal Toto Wolff believes Ferrari and Charles Leclerc were on "another level" before woes hit at the Hungarian Grand Prix.
Yet another strategic blunder by the Scuderia left Leclerc slipping from a likely race win down to sixth on a day where championship rival Max Verstappen charged from 10th on the grid to victory.
Leclerc had made his way past George Russell, who had held the lead from pole until lap 31, only for his race to unravel soon after with an unnecessary counter pit stop to Verstappen and a switch to the unworkable hard compound.
That meant Mercedes was able to clinch a double podium with Russell finishing behind team-mate Lewis Hamilton after a late-race charge on soft tyres from the seven-time champion.
"We never quite knew whether we would be able to race for the win," conceded Wolff.
"It was encouraging to see that George, on the soft, was able to hang on to the lead and Lewis was strong in P5 or P6, so that was an encouraging first sign.
"We knew that the Ferrari had more speed. When Leclerc passed George, it looked like we had to accept they were simply on another level."
Wolff praises Red Bull execution
Verstappen's charge put him 80 points ahead at the top of the championship with nine races left and saw him pit early to jump ahead of Lewis Hamilton before using his speed to ascend to the front.
"Where Max came from, he made big steps through the first overtakes which brought him into a good situation," explained Wolff.
"The early undercut of Lewis was a bold move because it wasn't clear then what would happen in the race.
"A strong race from them and a good execution."
Additional reporting by Ian Parkes