Toyota Motor Corp. and Nippon Telegraph and Telephone Corp. said Tuesday they will form a capital tie-up to build an energy-efficient "smart city" using advanced information technology.

In the tie-up, the auto and telecommunications giants said they will mutually invest around ¥200 billion ($1.8 billion) by purchasing each other's treasury stocks.

Development of "smart cities" has been accelerating globally. Autonomous vehicles provide transport for their residents and energy is used efficiently with internet-connected devices tracking real-time consumption of electricity and gas.

Toyota said in January it plans to build from early 2021 a fully sustainable prototype city at a 175-acre site at the foot of Mount Fuji where only fully autonomous, zero-emission vehicles will be allowed to travel on main streets.

In the area called Woven City, residents will have in-home robotics to assist their daily lives, with sensor-based AI systems monitoring their health.

The automaker has also been expanding a tie-up with Japanese household appliance and electronics maker Panasonic Corp. to collaborate in town development for next-generation lifestyles where homes and vehicles are connected to the internet.

NTT, meanwhile, has also focused on offering its telecommunications technologies to build smart cities in other countries.

In January, it said it will test a traffic monitoring system for a city in Malaysia to help smooth vehicle flows as well as identify model types to detect stolen vehicles.

NTT introduced a similar system in Las Vegas from February 2019 after testing it in the U.S. city in 2018.