With the rapid development of Artificial Intelligence, automatic writing evaluation (AWE) has received much attention from English Foreign Language (EFL) writing teachers. However, the obstacles and potential problems of integrating AWE in EFL writing instruction have yet to be explored. Scholars have indicated that the effectiveness of AWE in EFL writing instruction depends on the learners' depth of reflection. Hence, this study proposes a learning approach that integrates AWE and peer assessment (PA) based on the knowledge-building theory, with the expectation that learners will be able to strengthen their reflections on AWE feedback through PA, and thereby improve their EFL writing performance. To examine the effectiveness of the proposed approach, a quasi-experiment was conducted in a university EFL writing class. One of the classes (33 students) was the experimental group using the PA-AWE approach, and the other class (31 students) was a control group that studied using the conventional AWE approach (C-AWE approach). Findings revealed that the PA-AWE group outperformed the C-AWE group regarding EFL writing performance, learning motivation, critical thinking, and reduced EFL writing anxiety. In addition, a thematic inductive qualitative analysis of the interview data indicated each approach's benefits and learning conceptions.