The other semi-final between Artemis Racing and SoftBank Team Japan proved a more evenly matched contest, with the Japanese crew recovering from a shaky start to beat the Swedish team in race one.
Already 2-0 down after retiring with wing damage on the first day, in wild conditions the British team took an early lead in the first race of day two, but were overhauled by their opponents and lost the race.
Team New Zealand skipper Peter Burling said it's "never something you want to look across at your competitor and know they've got some pretty serious damage on board". The first team to reach five in each tie will progress to the challenger final for a chance to take on the American team.
The limit for racing is 24 knots, so this will be music to the ears of the Team New Zealand shore crew who were expected to be working overnight to fix the damage to their yacht in time for today's races.
Thursday's first race begins at 5:08am. "We've all got a few cuts and bruises, but nothing major".More news: "Reckless" May attacked by Amnesty International over threat to Human Rights Act
The guys are assessing the damage and we have quite a bit, Peter Burling, the New Zealand helmsman, said. We were just trying to get off the start clean.
"They're already working on the repairs and getting us back out there, and we'll bounce back from this". "It's the first time we have sailed in this much wind".
Looking forward, there could be some welcome respite for Team New Zealand in their bid to get their boat seaworthy again. Team NZ now leads the series 3-1 but face a race against time to be ready for the next race in the series.
"It's definitely sailing on the edge", Japan's skipper Dean Barker told BT Sport after completing the race.
Ainslie's Land Rover BAR were awarded the race to trail 3-1 in the best-of-nine Louis Vuitton America's Cup Challenger Series semi-final. In the buildup to the 2013 America's Cup, British Olympic star Andrew "Bart" Simpson was killed when Artemis Racing's 72-foot catamaran broke apart during a test run on San Francisco Bay.