Team New Zealand have taken a dramatic 2-1 lead in the America's Cup challenger final off Bermuda, after rivals Artemis Racing lost skipper Nathan Outteridge overboard.

The rivals were locked at 1-1 after the opening two races, as the Kiwis opened their account with a 47-second win in light conditions and Team Sweden rallied in the second outing, controlling throughout for a 15-second margin to even the scoreline.

But the third race of the day ended early for Artemis, as Emirates Team NZ slipped into the lead and Outteridge slid off his boat, as he transitioned across hulls.

"I didn't see it, but he must have just fallen off, as he crossed the boat, as the boat turned violently in the tack," said Sweden tactician Iain Percey.

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"It was a real shame there - we were setting up for the inside again at the top left mark, but these things happen. It's not very easy to turn on the boat at the rate they turn."

Team Sweden had probably provided Emirates Team NZ their toughest competition of any challenging team through the early rounds of the regatta, unlucky to lose one head-to-head encounter through an umpire error and forced into another costly penalty in the return match.

The aggressive style of Outteridge again played a part in opening race of the final, incurring a boundary penalty, as counterpart Peter Burling pressured him upwind.

New Zealand made their first big call of the day, when they elected to go with foils more suited to heavier conditions, while their opponents went with a lighter set-up.

The Swedes gathered speed quicker at the first start, leading by about four boat lengths across the line and eight seconds at the first mark.

Read more: Live updates of America's Cup challenger final, Day One

Neither boat was able to consistently stay on its foils during tacks in the light conditions and when ETNZ got their nose in front up the third leg, they were also able to force Artemis out of bounds for a two-boat length penalty.

Team NZ led by nine seconds at the third mark, extended slightly downwind, and then covered their rivals and extended over the rest of the journey.

"We were happy with the start," said Burling afterwards. "It was obviously really light when we entered, and it was tough to do the two gybes, get hooked up and get back to the start, which made life easy for them.

"The boys really dug deep with plenty of oil, so we could do some really nice tacks and that one foiling tack we did on the righthand side really set up the incident at the top."

Burling expressed confidence in the choice of foils, especially as the day progresses.

"We'll have to see how breezy it gets in the next race - it's back up to 12-13 knots and building, so we're not in a bad place."

In freshening winds, Artemis again controlled the start and run to the first mark, leading by three seconds downwind and essentially covered over the next four legs.

The Kiwis opted to split to the opposite side of the course on the final downwind leg, trying to recover their 11-second deficit, but could not find the extra puff needed to pass.

It was the first time Team Sweden had bested Team NZ during this regatta, and the onus was on Burling to win the start and not concede early initiative to Outteridge, who had now shown his ability to defend a lead.

Team NZ actually did win the third start, marginally, but were outpaced by Artemis to the first mark and found themselves playing catch-up once more.

Burling again took his ACC boat to the opposite side of the course, seeking some kind of edge to make a pass. They managed to do just that upwind on the fifth leg and, in the process, Artemis lost Outteridge overboard.

The Kiwis lead by 12 seconds around the top mark and the short-handed Swedes stopped sailing soon after.

"That was definitely a pretty exciting race and we did a much better job in the pre-start, but didn't quite get there down that first reach," reflected Burling.

"We fought really hard, we did a much better job getting that split and we were so tight all the way round, he could never get back on top of us.

"We felt, even if he didn't fall off, we were still going to get that gate back off them and take the win."

Burling was also confident his team was ready to step up, if the same calamity befell them at some point.

"For sure, in training, I've had a fair few spills - it's all part of it. These guys can cover me, if I go off and we can cover them, if they go off.

"We'd like to think we could carry on at full speed without much hesitation."

Percy could only reflect on a couple of lost oppportunities through the day, but that has been the nature of racing between these two teams so far, where the slightest error makes the only difference.

"We don't mind a dogfight, we don't mind a fist fight ... I think we have the calmness under press for that," said Percy. "There were too many mistakes frtom us, so I hope you see a more refined Artemis Racing tomorrow."

Today's schedule/results
Emirates Team NZ beat Artemis Racing (Sweden) by 47 secs (NZ 1-0)
Artemis Racing (Sweden) beat Emirates Team NZ by 15 secs (1-1)
Emirates Team NZ beat Artemis Racing (Sweden) withdrew (NZ 2-1)