Toto Wolff believes Mercedes are "eight to 10 months" behind Red Bull in terms of Formula 1 development after their problematic 2022 season.
Mercedes' W13 design has proved troublesome this season with the car initially affected by porpoising in the early rounds.
Once that had been solved, the car was then affected by mechanical bouncing, with its high level of drag meaning it is also slow in the high-speed sections of circuits.
It means Mercedes are yet to win a race in 2022 and have been dethroned from the Constructors' Championship they have firmly held since 2014.
Wolff believes his team are now also facing an uphill struggle for next season, having spent most of this one trying to diagnose and then solve the problems with the W13.
Wolff on Mercedes deficit
Wolff has previously revealed that a single decision taken in October 2021 was the root cause of the deficit Mercedes have had in 2022 - thought to be related to the design of the floor - and believes that while Red Bull have the upper hand, Mercedes will return to the front.
"[Red Bull] certainly [have] an advantage, but we believe that we understand where the gap comes from," he told media, including RacingNews365.com.
"Red Bull will carry over some of the sweetness in their car, and we've maybe lost eight-to-ten months in terms of development because we couldn't figure out what was wrong [with our car].
"So there is definitely a challenge, but we are playing the long game, all of us.
"Both drivers are playing the long game and I want to judge the team's performance not based on a single weekend or year, but how we've been able to win championships over the long term."
Viewed by others:
On fight with Ferrari
Despite not having won a race in 2022, Mercedes have remained strong operationally and tactically with only two retirements across the year.
These were both the result of first lap damage, with George Russell retiring in Great Britain and Lewis Hamilton in Belgium after contact.
It means with two rounds of the season - plus a Sprint in Brazil - to go, Mercedes are 40 points behind Ferrari in the Constructors' Championship, with the Italian team limping towards the end.
Wolff believes finishing P2 in the Constructors' would be "consolation".
"It will definitely be some consolation," he replied when asked about the prospect of finishing P2 in the standings.
"Because Ferrari had the quickest car in the beginning of the season, and finishing ahead of them would be great, but it is not our main priority.
"That is to understand the car and having a quick automobile on the track."
F1 Podcast: Is Red Bull's cost cap penalty enough of a deterrent to others?
RacingNews365.com F1 journalists Dieter Rencken and Michael Butterworth discuss the key issues from the United States Grand Prix, including whether Red Bull's cost cap penalty will deter others from breaching the budget limit.