Will an Apple AirTag work well to find a key fob for a Volvo XC60 recharge?

It will perform within the limits of AirTags.

If it’s in your house, precision finding works great and IS pretty cool.

If it’s in an area w/ lots of other iPhones, it works really well.

Fewer iPhones … less well.

If you drop your key fob on a remote mountain trail w/o any “finders” nearby … or plenty of “finders” but no mobile data network coverage … it won’t be locatable.

FWIW, I don't have a Volvo to compare with, but I have been using Apple AirTags will all of my vehicles (cars, trucks, ATVs, & zero-turn mowers) to keep track of their respective keys without any issues.

If you haven't purchased this AirTag yet, I suggest that you do so, and try it out. Apple provides you with a 14-day return policy should it not work out for you.