Lewis Hamilton had a few eyebrows raising as the first winter test concluded in Barcelona on Thursday.
"If our simulations are right, then there should be a close three-way battle between Ferrari, Red Bull and us," insisted team boss Toto Wolff.
Hamilton himself said that it is "way too early to say anything", especially given the lack of mileage at freezing Barcelona.
However, Ferrari's Sebastian Vettel thinks that Mercedes is clearly the favourite.
"Mercedes is the favourite but it would be nice if we are closer than last year," he said.
"And if Red Bull can catch up, then it gets really interesting.
"It's really hard to know where we are at the moment, but we will know some more at the end of next week.
"And then we will go to Australia and everyone will drop their pants -- and then we'll really see."
As for Red Bull, Max Verstappen had a troubled day on Thursday as he did short runs, had a spin into the gravel and also a car problem.
The Dutchman insisted: "It makes no sense to look at the laptimes now.
"So I'm not too worried yet. We know that Mercedes and Ferrari are really strong, but I'm pretty happy with the car so far. The feeling is definitely right."
The new season gets underway with the Australian Grand Prix on March 25.