Mercedes knew before the start of the Australian Grand Prix that Lewis Hamilton's car was developing the problem that would force his early retirement from the Formula 1 season-opener.
Polesitter Hamilton started dropping down the field almost immediately as his car lapsed onto just five of its six cylinders.
Mercedes motorsport chief Toto Wolff said the team had already noticed the issue and had been hoping it would clear.
"We realised that [he had a problem] already on the laps to the grid and hoped that the system would somehow reset," said Wolff.
"He was very unlucky because being on pole he deserved to have a great race too.
"It's a bit of a shame starting the season with a DNF but this is motor racing, this is how it goes."
The team vacillated over the radio about what Hamilton should do, initially telling him to retire before advising him to continue - and then eventually admitting defeat and calling him back to the garage at the end of lap two.
Mercedes 'must work' on reliability
"We didn't understand whether the cylinder actually failed or whether it was a misfire or an electronic problem," Wolff explained.
"At the beginning it seemed quite obvious that we needed to retire to protect the engine and then it was not very clear. Retiring the car was a safety measure."
Hamilton insisted afterwards that he was not downcast, despite seeing team-mate and likely title rival Nico Rosberg take 25 points for a dominant victory.
"There are massive positives to take from the weekend still," said Hamilton.
"We knew coming in that it could be an issue but of course it is always a surprise and you do everything to try to avoid any problems.
"It's the early stages, there's a long, long way to go, so I'll try to be positive and try to put my focus on the next race.
"This is a new era, this is what happens, you cannot expect us to all finish."
Wolff said Hamilton had handled the Melbourne problem very well.
"He's in good spirits," he said.
"With 18 more races to go there are going to be many more DNFs of other drivers and that's why he's OK."