Chosen Solution

I replaced the SSD on my Early 2014 Macbook Air 11". The Macbook was running Big Sur, so the EFI firmware should have been up to date. However, the new drive does not show up in disk utility. Any recommendations how the issue could be diagnosed?

If you are trying to use Internet recovery that won’t work as the macOS it is based on is the older version. You’ll need to swap it out with your original so you can setup a USB thumb drive as an OS installer using your systems Big Sur OS installer. First format the thumb drive to GUID Extended Mac. then follow this guide Create a bootable installer for macOS Now swap over the SSD again and then use the installer thumb drive to first format the new drive and install the OS. The last step is migrating your stuff back from your backup.