The issue is that Tesla is neither licensed as an auto dealer nor is allowed to sell its vehicles directly to customers because of franchised dealership laws. Iowa stands among states like Texas, Arizona, New Jersey and Maryland in its position that a third-party franchised dealership is legally required for car sales. Recently, Georgia said it may revoke Tesla's dealer license because of opposition from the Georgia Automobile Dealers Association. On the flipside, Tesla won a recent legal victory in Massachusetts.
Oh, and the tip to the Iowa Dot? It came from the Iowa Automobile Dealers Association.