The incident happened near shops at the junction of Fishley Lane and Stoney Lane, in Little Bloxwich, Walsall, at around 6pm on Thursday.
A 16-year-old was stabbed during the incident which also saw two cars ram into each other.
A 17-year-old was arrested on suspicion of possession of an offensive weapon and theft of a motor vehicle in nearby Bell Lane and has since been given police bail.
West Midlands Police said: "The teenager arrested has been bailed with conditions. Inquiries are ongoing.
"The injured boy is in hospital with injuries which are not believed to be life-threatening."
