To "see" an AirTag's current location, a number of things must happen:
- The tag sends a Bluetooth beacon signal with it location information.
- That signal must be able to transit your car's metal body.
- Any iPhone within Bluetooth range (~30'), with the following enabled, would receive that signal.
- Bluetooth
- Location services
- Find My Network
- That phone must have an active Internet connection, either by Wi-Fi or cellular, to then, relay that location information to the Apple servers. This is where you would see it on the Find My app on your iPhone.
So, all of these must be successful or else, you will get its last known location for up to 24 hours. Beyond that time frame, it would report as "No Location."
However, as you suspect, if someone has found the tag (which would not be difficult once they have access to your vehicle), they could remove its battery to disable it. There is no way to know if this is the case.