Mattia Binotto says Ferrari's target for 2021 is second place.
It comes after the famous and struggling Maranello team's chairman John Elkann recently ruled out a realistic title challenge until 2022.
Team boss Binotto admits that a big problem is that, amid the pandemic, Formula 1 decided to restrict certain areas of car development to cut costs.
For a team in Ferrari's situation, that means a long road ahead.
"We have certain limits that cannot be overcome," Binotto told Italian media.
"We can work on the engine for 2021, so that's a start, but the number of hours on the test stands is limited.
"We can do something, but we can't do as much as we could have done before," said the Italian.
Limited chassis development for 2021, meanwhile, will be governed by a token system.
Binotto said: "The aerodynamic areas are free, but here too the hours for using the wind tunnel have been reduced.
"Yes, there are limitations in developing a car that is behind. We believe we can improve, but I think trying to beat Mercedes would be wrong because the gap is enormous.
"However, we believe it must be possible for Ferrari to take second place in 2021."
Meanwhile, Ferrari has confirmed that Sebastian Vettel will use a new chassis this weekend in Barcelona, after two difficult races at Silverstone.
Chief engineer Simone Resta revealed that a "small fault caused by a heavy impact over a kerb" was found on Vettel's original chassis.
"It would not have had much of an effect on performance, but it was the logical decision to take," Resta said.