The mountain we're driving up is two kilometres high. In the distance, a patchy landscape of tea plantations and scrublands stretches out toward the horizon. Above us, bulbous clouds crawl by, scattering vast grey blankets of shadow.

The Audi R8 V10 weaves its way through snaking roads, the sun occasionally glinting across the windscreen, the crumbling surface almost palpable beneath the tyres. This is India, accurately and rather epically modelled into a racing game. At this height, at the very tip of the mountain range, the artists have had to think about the curvature of the Earth, and how this will affect sunlight and cloud patterns at the furthest reaches. This is where game visuals are going.

While we've known for months that DriveClub would take place in locations around the world, Evolution has only really showed Scotland so far – but while visiting the studio recently, we also caught glimpses of the impressive Canada and India environments. The art staff did what art staff do on racing games: they went on months of field trips to research architecture, geography and habitats; the difference is, the Evolution team seems to be trying to cram all of it into the game.

For each country, there are many miles of landscape, loaded with authentic local detail. Most of the circuits are inspired by real-life roads and the local street racing routes the researchers learned about. "All the detail we're putting in is equivalent to PC first-person shooters," says technical art director, Alex Perkins. "And then we're throwing a whole dynamic lighting system over the top."

As Perkins shows me the India circuit, he points out a drive along a river bed, through a valley of looming rock walls and out along a concrete overpass: "We've picked locations; and seasons that are indicative of the locations," he says. "I can think of three roads that we went along in this location that looked just like this; it's about capturing the soul of the roads and the networks". The seasonal element is important. Apparently, all the vegetation is accurate to the locations and the time of year – even the cloud movement is all real ("With summer clouds in the UK, the average lifespan is about eight minutes," Perkins points out nonchalantly at one point during the demo).

Everything is then lit via a true 24-hour day/night system, rather than a baked in sequence of pre-set lighting changes. "We've developed our own capture technique so the lighting in shadow, the lighting in direct sunlight and the way the car highlights fall off over distance – they all maintain proper energy conservation values," says Perkins. "We had to redesign our entire materials system – how we actually collect the information; it's much closer to the process you'd have on a film set for compositing CG elements into a live action image."

This transference to cinematic technique – the sort of things that would have been impossible to render in real-time on current machines – may well become a theme in console games moving forward. "The first time you saw a truly composited CG element used directly in a film, such as the T1000 walking through the fire in Terminator 2, that's where we are in games right now," says Perkins. "You have to think about ensuring consistency in real-world lighting in that way. But in film, its graded to match the lighting conditions on a scripted shot-by-shot basis, which obviously we can't do; for us, everything has to be dynamic to interpret the camera position and the lighting conditions in real-time."

DriveClub tunnel Photograph: Sony

Showing flair

For a while, we've seen effects like lens flare coming into games to mimic the sense of viewing filmed footage through a screen, the sense that you're somehow in a movie; but this is all becoming much more complex as lighting technology matures.

"None of the direct light or shade is faked anymore," says Perkins. "It's at the point where you can see things like dynamic lens flare when you look at the sun and you can see a bit of chromatic aberration because we're mimicking slightly cheaper film lenses to capture deliberate imperfections that will make the game more lifelike."

But there is more to it than simply making nice effects. It's about using environmental lighting to build atmosphere on a macro level. "One of the big things we're trying to do with the game, is to keep things as dynamic and changeable as possible," says Perkins. "The whole look and feel of the game changes dramatically based on the cloud covering – there's massive variation every time you play. And the light scatters properly, so when the clouds are injected into the scene, we get a real sense of scale."

Car models too surpass anything Evolution has done before. While Motorstorm vehicles maxed out at around 23,000 polys each, DriveClub models are hitting 250,000, with interiors alone requiring around 60,000. Everything is authentic, from the fully functional speed and rev dials on the dashboard to the materials on the seats. Principle vehicle artist Neil Massam tells me that manufacturers are now having to rethink their approval procedures for racing games because the level of detail is so high.

What's interesting is the increasingly close interplay between audio visual fidelity and car handling. In the first-person view, the head movement of the driver is designed to convey the feeling of what the car is doing beneath you. The team has apparently spent a long time working on tyre feel, the tactile input from skidding along tarmac, the imperfections of which are procedurally generated.

There are also intricate audio cues on what the tyres are doing, leading to demands for more memory from the audio designers. As game director Col Rodgers explains, "The tyres of hundreds of different states, we know exactly what they're doing at any one time, and obviously the audio guys want to replicate that as much as possible, which means upping the amount of samples. Audio feedback is a massive part of the handling experience, a lot of people forget that."

As for the handling model itself, the game director overseeing handling, Paul Rustchynsky, says his team includes ex-staff from the Gran Turismo, Project Gotham and Grid 2 all working on the feel of the drive. From our demo session, the aim seems to be upper-end arcade; cars are mostly sturdy and corner well, but they can slide out enthusiastically if the line is missed. For me, the effect is somewhere between Forza Horizon and, say, Need For Speed: Most Wanted.

"We start with the real data – they give us the CAD [computer-aided design] modelling of the cars and all the details on the engine torque curves and suspension set-ups, etc," says Rodgers. "We port that straight into the game, but we then look at the characteristics of the cars – we read reviews we watch videos, in some cases we get to drive them – and we think what makes it stand out? We try and implant those aspects into the personality of our car."

DriveClub yellow Photograph: Sony

Keeping it real

The aim then, is authenticity but not simulation. "It sits in the middle between simulation and arcade," clarifies Rustchynsky. "It's grounded in realism, so the cars have a sense of weight, a tactile feel with the road, but we want to make sure it's easy to throw them around the corners, it's all about having fun with the cars. But there is a lot of depth – you want to shave milliseconds of your lap times, you can do that. But players can pick up the pad and hammer the throttle, the intricacies can be picked up later."

To me, this makes sense. I've grown utterly disillusioned with hybrid sims that simply rack up the driver assists to create an easy mode – you often end up feeling like you're controlling a Scalextric car. "You have to be careful of taking control away from the player," says Rustchynsky. "We've had feedback from professional drivers, we've had people come in from the manufacturers … it's always about making sure we have a clear focus; we want to make sure players can feel what the car is doing while maintaining full control.

"We've spent a lot of time refining how we deal with player inputs. If the player throws a car around the corner then touches the stick in the other direction we need to know how much opposite lock to give them at that time. Give them too much, they'll spin, too little and they'll under-steer. It's just all about refining and iterating. We feel we have the sweet spot now."

Some of this sounds like racing simulation 101, some is highly ambitious, but all of it hinges on seeing a more complete demo. We've still only played the alpha build, which is 35% complete, and while the scale of the environments is clear, there is plenty of polish left to add if this is going to resemble the next-generation racer we're being promised. No doubt much more will be revealed at Gamescom, where we'll also find out more about the game's approach to matchmaking, and the smartphone app that will accompany it.

Right now, a lot of the talk is about potential of the PS4, the reserves of power locked away in its architecture. Very briefly during my visit to Evolution, I chatted to studio group technical director Scott Kirkland about the PS4's graphics processing unit, which supports Compute – a means of utilising the power of the GPU for general processing tasks. There's a chance this could have a profound effect on the possibilities available to developers, with ramifications for AI, physics, lighting, etc. Is this already being explored?

Kirkland is intrigued but reckons there's plenty of time to find that stuff. "You already have a lot of CPU power at your disposal," he says. "I think with many of the first generation PS4 titles, developers probably won't need to worry about it – they'll be able to get a lot out of parallelism across the CPU cores – but for teams who are a bit more ambitious, who want to do interesting things, it's just waiting there. We're doing some of that in DriveClub and I'm sure other guys will go further – and the platform guys will expose more of that functionality through the lifespan of the machine, unlocking more potential."

DriveClub interior Photograph: Sony

Shared future?

Toward the end of the studio visit, I bring up that reference that Perkins made earlier, about the intricacy of the landscape, and how it resembles the detail of a PC first-person shooter. I ask, not entirely seriously, if we're heading into a possible future of shared servers – could Evolution get together with Guerrilla and build an online landscape that will house both racing and FPS games; so you'll have supercars jetting it along highways as infantry battle all around. "It's technically possible," says one of the game directors. "I like that idea."

That's sort of the fun thing right now – developers getting to grips with the next-generation, working out what will be the new technical standards, the new infrastructural paradigms that could shape how games work. When you have a game engine that renders to the horizon from a height of 2.2km, then anything is possible. But just to be clear: if Sony Worldwide Studios does announce a unified online game world with elements of both DriveClub and Killzone, I'm taking 10% commission on revenue. Okay Sony?