Toto Wolff says Mercedes is "under no illusion" about how difficult the coming races will be for the team as F1 rivals close in on the championship leaders.
Mercedes started the campaign with the dominant car, and has won eight of the 12 races thus far, with Kimi Antonelli holding a 59-point advantage over team-mate George Russell and Ferrari's Lewis Hamilton in the drivers' standings, and the team an 87-point buffer over Ferrari.
However, Mercedes has not brought any sizeable upgrades since May's Canadian GP, with Wolff saying after a Dutch GP where Antonelli claimed race-winner Lando Norris's McLaren was now "the car to beat" that the team was working in the "financial realities" of the cost cap and could not afford to bring as many regular upgrades as McLaren and Ferrari.
Furthermore, as the upgrade cycle continues, Antonelli is poised to take a dent in his points lead by taking a back-of-the-grid starting penalty for his home race by taking a full new power unit, which will be of the same specification as the existing units.
Looking ahead to the weekend, at a track Mercedes has not won at since Hamilton's 2018 win, Wolff feels that "the price of a mistake is much higher" as Mercedes' advantage is eroded.
"Monza and Madrid begin an important period for us. The field has compressed to the point where several teams can win on merit, and the price of a mistake is much higher," said Wolff.
"We have put ourselves in a strong position in both championships, but nobody in our team is under any illusion about how difficult the next races will be.
"For us, Monza begins with a challenge. Kimi will take a power unit penalty and start from the back of the grid. It's disappointing for him and for the fans who want to see him fighting from the front in his home race, but our sport doesn't reward sentiment.
"When you make decisions that benefit the championship campaign, sometimes you pay a short-term price. The objective now is straightforward: recover as many places as possible and maximise the points.
"On the other side of the garage, George arrives with good momentum after Zandvoort and will be looking to put himself firmly in the fight from the start of the weekend.
"Monza is an energy-poor track; you spend much of the lap asking everything from the power unit and don't have many opportunities to charge the battery.
"With the current regulations, that creates compromises that will need to be managed carefully. It is an interesting challenge and one that will likely lead to an exciting weekend."
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