An 18-year-old man was arrested on suspicion of murder at around 2am on Sunday at an address in the town.
The force said it is understood that 10 minutes before the victim was taken to hospital, he was chased into a shop in Waterloo Road and attacked with a knife.
He was taken to hospital after being found with injuries but was pronounced dead around an hour later.
Police said the suspect remains in custody.
Detective Inspector Hannah Whitehouse, from the homicide unit, said: “This is a tragic loss of a young life and my thoughts are with the boy’s family who are clearly devastated at what’s happened.
“We understand the victim was stabbed in Waterloo Road but then transported in a white Ford Focus that crashed in Heath Street.
“Several people fled the scene of the collision and we are working hard to try and identify everyone involved.”
She continued: “My officers worked through the night and this morning to seize CCTV, speak to witnesses and gather intelligence.
“That led us to the address in Smethwick where a suspect was arrested.
“I really need to hear from any witnesses who saw the victim being chased in Waterloo Road or him and the attacker leaving that location, plus anyone who saw the collision in Heath Street and what happened afterwards.
“If anyone captured video on phones or dashcam then I would also urge them to get in touch as they could have vital information.”