Ferrari will take a sharp turn away from its planned "development path" for the 2020 car, after being lapped by race winner Lewis Hamilton in Hungary.
"Formula 1 can change so quickly," former F1 driver Ralf Schumacher said.
"Ferrari fought for the championship a year ago, so what we see now is really a historical crash. Unbelievable," he told Sky Deutschland.
"It cannot go on like this. A lot has to change at Ferrari."
Sebastian Vettel, the Maranello team's highest finisher on Sunday, said he was not surprised when he saw the blue flags.
"It was clear to us before the race that we would be lapped," he told RTL.
According to Schumacher, the collapse has been coming for years.
"Their biggest mistake in recent years was dismissing Stefano Domenicali in 2014," said the German.
Since then, Ferrari has run through team bosses Marco Mattiacci and Maurizio Arrivabene, with current boss Mattia Binotto now promising a change of direction.
However, he admits that with the cars frozen for 2021, that will be difficult.
"To understand if we can close the gap, we first need to find the reasons for our lack of speed," said Binotto.
"But there is no other solution than to change our development path. Everyone should analyse what is going on and have the courage to make changes to the method where necessary.
"The current dynamics within the team are unacceptable," the Italian added.
