Toyota has unveiled plans to build a sustainable “city of the future” near Mount Fuji that will run on hydrogen fuel cells and become a living laboratory for self-driving vehicles, robotics and artificial intelligence.

The Japanese carmaker said Woven City, covering 70hectares on the site of a factory that is due for closure, would be home to full-time residents and researchers. The name is a reference to the firm’s origins as a loom manufacturer.

The prototype city, announced at the CES technology show in Las Vegas, will host a futuristic community that will cut carbon dioxide emissions from vehicles and buildings and use internet technology in practically every aspect of daily life.

Toyota said about 2,000 people, mostly the firm’s employees, would live in the city to begin with and construction was due to start next year.

Toyota’s Akio Toyoda unveiling the plan for the sustainable Woven City in Japan. Photograph: Steve Marcus/Reuters

The city was designed by Bjarke Ingels, the Danish architect whose firm was behind the 2 World Trade Centre building in New York and Google’s offices in Silicon Valley and London.

“Connected, autonomous, emission-free and shared mobility solutions are bound to unleash a world of opportunities for new forms of urban life,” Ingels said.

Toyota’s chief executive, Akio Toyoda, described the utopian vision as his “personal field of dreams”.

“You know that if you build it, they will come,” he said. “I believe it is up to all of us, especially corporations like Toyota, to do our part to help make the world a better place. Woven City is one small but hopefully significant step towards fulfilling that promise.”

Toyota said the city would be “fully sustainable”, with buildings made mostly of wood to minimise the carbon footprint. “The rooftops will be covered in photovoltaic panels to generate solar power in addition to power generated by hydrogen fuel cells.”

Other businesses would be free to collaborate on the project, the firm said, adding that it would invite scientists and researchers from around the world to use Woven City as their “real-world incubator”.