Grace said a key was the outstanding starts from Auckland's Ethan Mitchell who clocked 17.2 in both rides.
"Both of those rides were world class. Right now at this time, Ethan is probably the fastest starter anywhere."
In a pre-arranged strategy, Grace swapped out Invercargill's Matthew Archibald for Auckland's Sam Webster for the final. Webster, a former triple junior world champion, produced a 12.711 second lap with Invercargill's Eddie Dawkins following with a 13.076.
"To take 0.3s off our previous best is a huge chunk of time even on this fast track at altitude," Grace said. "But the job is not over, as we have important qualifying in the keirin with Eddie tomorrow and Matt and Sam in sprints on Sunday."
France topped the morning qualifying in 43.066, which was more than 03.s faster than New Zealand, Australia and Russia. But the New Zealand team edged France by nearly 0.2 seconds in a the final.
"We are not getting ahead of ourselves. We will go back home after this and get back to some hard work, with the national championships in two weeks time."