Officers are attending the scene on the A48 Clase Road near Swansea following the incident on Friday.
A vehicle at the scene sustained damage consistent with a firearms discharge and a critical incident has been declared, South Wales Police said.
A 41-year-old man from Llansamlet was arrested on suspicion of possessing a firearm with intent to endanger life.
A 16-year-old boy, also from Llansamlet, was arrested on suspicion of affray. A criminal investigation is under way.
Chief Superintendent Stephen Jones said: “A policing presence will be visible in the area whilst this investigation is ongoing.
“It is important that people avoid the area so we can effectively deal with this incident and return the area to normality.”
Road closures remain in place.
