Mercedes AMG F1 boss Toto Wolff admits that after three years of utter dominance the German outfit has relinquished its role as the favourite.
Mercedes and Ferrari are up against each other this season following a spectacular resurgence of the House of Maranello.
The arch-rivals have traded wins so far this season - three each - but Wolff concedes that the Scuderia is now in the leading role while Mercedes plays the underdog.
"It's painful, but we are not the favourites for this year's Championship," says Wolff.
"At the moment it's Ferrari. They have a very strong package and we need to rise to the challenge to prove once again that we are the team to beat."
Mercedes has produced a relatively strong car for 2017, but at its core the W08 also suffers from a difficulty to fully exploit its tyres, mainly when shod with Pirelli's Ultrasoft compound.
"In the end, how the chassis interacts with the tyres is a complex subject," Wolff told Motorsport.com.
"There are many dozens of factors that interact and make it perform or not. This is not about seeking an excuse because others are able to extract the performance of the tyres and we don't.
"We have seen from some our competitors, like Red Bull they have been far out of the window, one-and-a-half seconds off the pace.
"Then back in the race, you could see they are performing well. It's a problem that seems to hit everybody but not Ferrari. All credit to them - they have a solid car that is capable to cope with the tyres."
Regardless of its new underdog status, Mercedes will be challenging Ferrari every inch of the way from now until Abu Dhabi. The rivalry may just be heating up and the race to the title is wide open, insists Wolff.
"There are still 14 races left and everything is completely open," says the Austrian.
"I'm expecting an interesting weekend in Canada. It could be a tricky race for us in terms of the layout of the track. But, equally, it's a circuit that suits both of our drivers.
"Lewis has won a number of times in the past and Valtteri has always gone strongly there for Williams. It will be about doing our homework right to give the drivers the car they need to succeed."
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