Alphabet's Waymo subsidiary is training self-driving cars by using virtual worlds and a real-world testing ground near Merced, California, according to a report in The Atlantic.

The report offers new insight into the massive effort Alphabet is expending in self-driving cars, and suggests how hard it will be for other companies to catch Waymo, which began as a Google division eight years ago.

The company has built software called Carcraft — named after the popular game "World of Warcraft" — that it uses to test self-driving car software in virtual re-creations of cities like Mountain View, California, and Austin, Texas. The company drives 8 million virtual miles every day, concentrating on particularly tricky road conditions. By way of comparison, the company's real self-driving cars drive about 3 million miles a year.

Waymo also has built what the report calls a "fake city" near Merced, California, several hundred miles from the company's main campus in Mountain View. In Merced, it tests cars on roadways meant to simulate complicated real-world conditions, like roundabouts or driveways in a suburban development.

Read the full report here.