Create content type template using Power Shell

Using the below PnP PowerShell, we can create the content type in SharePoint online and can assign a document template to it:

$filePath = ".\Document Template\DocumentTemplate.docx"
$filename = "DocumentTemplate.docx"

$serverRelativeSiteUrl = "/sites/my-demo"
$ctName = "Any new Document"

# create the content type
$ct = Add-PnPContentType -Name $ctName -ContentTypeId 0x0101006604da7f262243448cb56226f4f30c79 -Group "Tester" -Description "No description available."

# upload the document template to the corresponding folder of the content type (site relative url)
$f = Add-PnPFile -Path $filePath -Folder "/_cts/$ctName"

# get the content type object
$ct = Get-PnPContentType -Identity $ctName

# set the document template in the content type to the uploaded file and update in the content database
$ct.DocumentTemplate = $filename
$ct.Update($true)
(Get-PnPContext).Load($ct)
Invoke-PnPQuery

# that's it

Demo output:

Reference:

Create SharePoint Content Type with Document Template

Other ways of creating content type - using PowerShell:

#Load SharePoint CSOM Assemblies
Add-Type -Path "C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\16\ISAPI\Microsoft.SharePoint.Client.dll"
Add-Type -Path "C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\16\ISAPI\Microsoft.SharePoint.Client.Runtime.dll"

#function to turn ON Content Type in SharePoint Online list or library
Function Create-SPOContentType()
{
    param
    (
        [Parameter(Mandatory=$true)] [string] $SiteURL,
        [Parameter(Mandatory=$true)] [string] $CTypeName,
        [Parameter(Mandatory=$true)] [string] $CTypeDesc,
        [Parameter(Mandatory=$true)] [string] $ParentCTypeName,
        [Parameter(Mandatory=$true)] [string] $CTypeGroup
    )

    Try {
        $Cred= Get-Credential
        $Credentials = New-Object Microsoft.SharePoint.Client.SharePointOnlineCredentials($Cred.Username, $Cred.Password)

        #Setup the context
        $Ctx = New-Object Microsoft.SharePoint.Client.ClientContext($SiteURL)
        $Ctx.Credentials = $Credentials

        #Get all content types from the site
        $ContentTypeColl = $Ctx.web.ContentTypes
        $Ctx.Load($ContentTypeColl)
        $Ctx.ExecuteQuery()

        #Get the parent content type
        $ParentCType = $ContentTypeColl| Where {$_.Name -eq $ParentCTypeName}

        #Check if content type exists already
        $ContentType = $ContentTypeColl| Where {$_.Name -eq $CTypeName}


        If($ContentType -ne $Null)
        {
            Write-host "Content type '$CTypeName' already exists!" -ForegroundColor Yellow
        }
        else
        {
            #Specify properties for the new content type
            $CTypeCreationInfo=New-Object Microsoft.SharePoint.Client.ContentTypeCreationInformation
            $CTypeCreationInfo.Name=$CTypeName
            $CTypeCreationInfo.Description=$CTypeDesc
            $CTypeCreationInfo.Group=$CTypeGroup
            $CTypeCreationInfo.ParentContentType=$ParentCType

            # sharepoint online powershell create content type
            $ContentType=$ContentTypeColl.Add($CTypeCreationInfo)
            $Ctx.ExecuteQuery()

            Write-host "Content Type '$CTypeName' Created Successfully!" -ForegroundColor Green
        }
    }
    Catch {
        write-host -f Red "Error Creating Content Type!" $_.Exception.Message
    }
}

#Set parameter values
$SiteURL="https://crescent.sharepoint.com"
$CTypeName="Projects"
$CTypeDesc="Content type for Project template"
$ParentCTypeName="Item"
$CTypeGroup="Crescent Projects"

#Call the function
Create-SPOContentType -SiteURL $SiteURL -CTypeName $CTypeName -CTypeDesc $CTypeDesc -ParentCTypeName $ParentCTypeName -CTypeGroup $CTypeGroup

The above same approach Create Content Type in SharePoint Online using PnP PowerShell

#Config Variables
$SiteURL = "https://crescenttech.sharepoint.com"
$ContentTypeName ="Crescent Projects V3"
$ContentTypeDescription ="Base Content Type for Crescent Projects Template"
$ContentTypeGroupName = "Crescent Content Types"

#Connect to PNP Online
Connect-PnPOnline -Url $SiteURL -Credentials (Get-Credential)

#Create Content Type
Add-PnPContentType -Name $ContentTypeName -Description $ContentTypeDescription -Group 
$ContentTypeGroupName

Reference:

SharePoint Online: Create a Content Type using PowerShell

Update:

How to add template to Content Type from the local system?

function Set-SPODocumentTemplate($ctx, $ctname, $templateName, $templatePath){
  write-host "Getting $($ctname) content type information... " -NoNewline
  $contentTypes = $ctx.Site.RootWeb.ContentTypes
  $folder = $ctx.Site.RootWeb.GetFolderByServerRelativeUrl("_cts/$($ctname)")
  $ctx.Load($folder)
  $ctx.Load($contentTypes)
  try{
    $ctx.executeQuery()
    write-host " done." -ForegroundColor Green
  }
  catch{
    write-host "Error While Getting $($ctname) content type information $($_.Exception.Message)" -foregroundcolor red
  }
  write-host "Uploading $($templateName) document template... " -NoNewline
  $FileStream = New-Object IO.FileStream($templatePath,[System.IO.FileMode]::Open)
  $FileCreationInfo = New-Object Microsoft.SharePoint.Client.FileCreationInformation
  $FileCreationInfo.Overwrite = $true
  $FileCreationInfo.ContentStream = $FileStream
  $FileCreationInfo.URL =  $templateName
  $Upload = $folder.Files.Add($FileCreationInfo)

  $contentType = $contentTypes | Where {$_.Name -eq $ctname}
  $ctx.Load($contentType)
  try{
    $ctx.executeQuery()
    write-host " done." -ForegroundColor Green
  }
  catch{
    write-host "Error While Uploading $($templateName) document template $($_.Exception.Message)" -foregroundcolor red
  }
  write-host "Setting $($ctname) content type document template... " -NoNewline
  $contentType.DocumentTemplate = $templateName
  $contentType.Update($true)
  try{
    $ctx.executeQuery()
    write-host " done." -ForegroundColor Green
  }
  catch{
    write-host "Error While Setting $($ctname) content type document template $($_.Exception.Message)" -foregroundcolor red
  }
}

Add-Type -Path "C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\15\ISAPI\Microsoft.SharePoint.Client.dll"
Add-Type -Path "C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\15\ISAPI\Microsoft.SharePoint.Client.Runtime.dll" 

$siteUrl = Read-Host -Prompt "Provide the URL"
$adminUsername = Read-Host -Prompt ("Provide user for {0}" -f $siteUrl)
$secureAdminPassword = Read-Host -Prompt ("Provide password for {0}" -f $adminUsername) -AsSecureString

$credentials = New-Object Microsoft.SharePoint.Client.SharePointOnlineCredentials($adminUsername, $secureAdminPassword) 
$ctx = New-Object Microsoft.SharePoint.Client.ClientContext($siteUrl)
$ctx.Credentials = $credentials

Set-SPODocumentTemplate $ctx "JS231SP Word Document" "template.docx" "C:\Templates\template.docx"
Set-SPODocumentTemplate $ctx "JS231SP Excel SpreadSheed" "template.xlsx" "C:\Templates\template.xlsx"
Set-SPODocumentTemplate $ctx "JS231SP PowerPoint Presentation" "template.pptx" "C:\Templates\template.pptx"

Reference:

Setting the document template for a content type in SharePoint Online with PowerShell