The actress, who is currently on location in Australia filming 'Don't Be Afraid of the Dark', was shooting a scene in the vehicle when the battery exploded last weekend.
Katie was left shaken after dashing from the car just before it burst into flames.
A source said: "Katie was inside a car when the vehicle's battery exploded - it was sparking smoke and fumes before the car then caught fire.
"The exploding battery was not a part of the film."
In 'Don'tBe Afraid of the Dark' - a remake of a 1973 TV movie - Katie plays a woman who is stalked by wicked gnomes.
Katie - who is married to Tom Cruise - has previously revealed she is excited about working on the new film.
She said: "I'm really enjoying it. The movie is really character-driven. It's really her journey becoming a mother. In the midst of that, there are unexpected scares."
Katie has been accompanied on her trip by her three-year-old daughter Suri.
It was recently claimed the 30-year-old actress splashed out £400 to ensure her child won't miss their Los Angeles home too much.
Katie is believed to have treated the youngster to a bicycle, a 'Dora the Explorer' piano, a Barbie doll, luxury bed sheets, lavish home accessories and a selection of traditional board games.
