I unfortunately have the exact same problem.
I have a 2011 Volvo XC70, and my iPhone XS worked flawlessly with the handsfree integration in that car (Bluetooth).
But after I bought the iPhone 12 Pro (iOS 14.x) at the end of 2020, I have severe connection issues with the car. I find it very strange that there seems to be no updates from Apple on this matter, since it seems to affect a LOT of iOS 14.x users.